The Bank of England will fail to forecast the next financial crisis despite having learned from its “Michael Fish” moment, MPs have been told.
Gertjan Vlieghe, a member of the Bank’s monetary policy committee, served notice on “unrealistic expectations” being placed on economics and forecasting models.
“I’m never confident of any forecast,” he told the Treasury select committee
Vlieghe said the Bank always reviewed the cause of forecasting errors by exploring available data and looking at a variety of economic structures and learning from any mistakes, but no projection was perfect.
“It is always going to be the case… that there are going to be large forecast errors, that we are not going to forecast the next financial crisis, nor are we going to forecast the next recession.
“Models are just not that good,” he said, in an open session also attended by the Bank’s governor, Mark Carney.
BoE chief economist Andy Haldane made headlines last month after saying that the performance of the economy since the EU referendum had been a “surprise” and admitted several forecasts in recent years had been missed.
He referred to failures in economic forecasting from the Great Depression in the 1930s to the Great Recession in 2008 when warnings were not heeded.
Haldane compared the banking crisis to an infamous October 1987 weather forecast by BBC meteorologist Michael Fish, who wrongly denied claims a hurricane was going to hit Britain.