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David Blanchflower: Alan Budd's departure threatens independence of economic forecasts

(Update) The leading economist claims no independent economist will want to head up the Office for Budget Responsibility after Sir Alan Budd's shock departure, dashing George Osborne's hopes the new institution will give credibility to his spending decisions.

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by Daniel Grote, Deborah Hyde on Jul 06, 2010 at 17:00

David Blanchflower: Alan Budd's departure threatens independence of economic forecasts

Leading economist David Blanchflower has claimed no independent economist will be willing to head up the Office for Budget Responsibility after Sir Alan Budd's shock departure, dashing chancellor George Osborne's hopes the new institution will give credibility to his spending decisions.

Osborne created the OBR in one of his first moves as chancellor in order to provide independent economic forecasts for the Budget and assess the government’s efforts at reducing the deficit. However, two months into the job Budd (above) has said he does not wish to renew his three-month contract. The move follows criticism that the OBR - which has begun life based in the Treasury - is not independent. Philip Booth of the Institute of Economic Affairs described the news as 'a blow' to the reputation of the fledgling institution.

Blanchflower (left), a former member of the monetary policy committee and a critic of the coalition government's proposed spending cuts, said: 'Which independent forecaster is ever going to touch this job which is going to destroy their reputation?'

Blanchflower, professor of economics at Ivy league US university Dartmouth College, claimed only 'right wing modellers' would be willing to take the job and if that happened it would damage the OBR's economic forecasts.

Those concerns were echoed by Andrew Tyrie, the elected Chairman of the Treasury Select Committee, who said: 'The OBR's credibility for quality and independence of judgement is still to be fully established. Its degree of independence is already a matter of concern to some.'

He described Budd's departure as ' a great loss', saying he is one of the country's finest and most experienced economists and a man of considerable integrity.

Resignation adds to uncertainty amid 'double dip' fears

With signs in recent weeks that economic growth in the US is faltering and evidence of a slowdown in China, economists are increasingly nervous about what the coalition government's £40 billion fiscal retrenchment means for UK growth. Blanchflower believes the loss of 1.3 million jobs could lead to another Depression. He pointed to an article in last weekend's Sunday Telegraph in which Goldman Sachs' economist Jim O'Neill, a long-term cheerleader for fiscal consolidation, wrote: 'All G20 members tightening fiscal policy at the same time as the UK's tough stance would make it hard to deliver on improving growth for all, or possibly any.'

'Within eight weeks of being there, their [Conservative] economic policy is in disarray,' Blanchflower said.

Blanchflower said Budd would know that critics like him would continue to rubbish more forecasts of growth in the face of huge cut backs in the public sector. 'Budd is an honourable man. Why would he go along with this?' he said.

Treasury: Budd always meant to go early

The Treasury sought to play down the significance of Budd’s resignation saying his tenure was always meant to be temporary. But asked about succession, a Treasury spokesman said only: 'The government will seek to ensure continuity for the OBR in recruiting Sir Alan's successor.'

Sources close to the OBR said a successor would be appointed once a more concrete plan for the OBR's structure had been drawn up by the OBR's board. 'Part of what he'll [Budd] do before he goes is to look at the structure of the OBR going forward,’ said the source.

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13 comments so far. Why not have your say?

"ALWAYS BEEN THE VASE" Just what does this mean you careless lazy person.Too tired to check your script or know that C and V are adjacent on the keyboard

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Well, this is a crucial organisation, and he clearly didn't want the post. How did they recruit him?

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Barrie, striaght on the attack, nice. Pity you are too careless, or perhaps lazy, to notice a missing full stop, three commas and a question mark in your beautifully crafted piece.

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'Within eight weeks of being there, their [Conservative] economic policy is in disarray,'

Well he would say that wouldn't he?

Conversely I think their economic policy looks utterly determined and focussed if anything.

Lets just hope they have got their sums right!

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Is it really that surprising that Budd, who must be getting quite long in the tooth, only wished to be involved for a short setting up period? Blanchflower, rather like Paul Krugman, seems to be setting himself up an all-purpose media commentator with the kind of ultra-Keynesian views that, back in the 50s and 60s, ended up giving Keynes an unjustified bad name when inflation took off in the 70s.

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Sounds like Sir Humphrey (or, in the Treasury's case Sir Frank) has been at work to defend its turf and get rid of a possible rival.

(By the way what "VASE"? I can't find one in the article)

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David Blanchflower was wrong in the past and will be wrong in the future.

Why does he keep making silly sensational comments?

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The original article had the phrase in quotes "it was the vase" which made no sense .. The phrase should have been " it was the case". This referred to Budd's sudden departure.

Grote thought he was quoting something clever when all he was doing was being ignorant and lazy.

Funny how they got rid of it so soon. Embarrassed or what?

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Blanchflower is a loser. He should STFU.

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Government must be based on solid well thought out policies and not tainted by dogma and political positioning.

A expert will reach conclusions bases on his understanding and analysis of the factors involved. This crop of politicians introduce the policy first and ignore every counter argument.

The overriding policy appears to be, "It looks like a good idea so we will do it and never mind the facts"

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Blancheflower, a man who does not practice in his personal finances that which he advocates for the public sector.

In the words of one James Gordon Brown the man is a 'financial bigot' who was appointed not so much for his financial credentials as his political affiliations.

Penny to a pound his portfolio is stacked with income yielding capital growth assets, not socially engineered companies, bound to make a loss nor companies venturing into areas of unfunded projects and borrowing more and more money to 'buy' their way out of their financial excesses.

The man is a charlatan and a pygmy. He may know the workings of his subject, but as an academic doesn't have to produce results for his investors to earn a living.

For him better to rob those that have money to bail out those who were reckless and substantially in trouble because of that requiring the likes of Blancheflower to come up with rescue plans for them at the expense of the prudent.

You do not adulterate product and hope to have good results from you cooking, it is tasteless and inevitably the result is an abomination. For him to get flavour, it would be better that he put a sock worn for two weeks into his mouth and sucked on that. E.G. adding skimmed milk to whipping cream and then wondering why it will not thicken.

The man makes me sick and his silence is desired.

When proved wrong, will he compensate those that lost money as a result of his prognostications? No, he will take the dividends from his not following his advice and enjoy the good life, but not from his labours.

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DC/GO, This needs sorting and quickly!

Independence and public confidence needs to be established.........now!

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Ace-UK

Jul 07, 2010 at 09:47

Blanchflower got it right pre-crunch and then ran off to a different continent.

Likely he's getting a bit out of touch - there are many examples of people being right once and living on it thereafter. Perhaps the BBC will give him a show a la "YOUR FIRED" ....

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