Anthony Hilton: Is it time for George to call in Mr Smithers?
Saturday 23 February 2013
The prize for this week's star bit of economic analysis goes to Andrew Smithers of Smithers & Co. He kicked off his weekly commentary with the scathing observation that "current economic policies consist of trying to do the wrong thing and fortunately failing."
He added: "The post- crisis recovery has been the weakest on record despite the greatest ever fiscal and monetary stimuli. This must either be because the medicine has not been strong enough or the diagnosis is wrong. Policy makers favour the first; we favour the second."
Bang on cue it became obvious on Thursday with the latest data on public borrowing that George Osborne will fail to reduce the deficit at all this year. Corporation tax receipts in January were disappointing; welfare payments unsurprisingly were high. And his sleight of hand in counting in the windfall from the auction of the mobile phone spectrum backfired when he got a billion or two less than he had expected.
And this is separate from a construction sector sinking slowly to its knees and a balance of payments position which shows little to no sign of improvement. Alarmingly this persists in spite of the substantial devaluation of the pound a couple of years ago, and a further slide in the value of the currency in the few weeks since the Prime Minister announced his plan to hold a referendum about staying in the European Union.
The private view from the Bank of England and much of the City, meanwhile, is that Osborne needs an economic adviser - a polite way of saying he needs to understand this stuff better. Perhaps he should appoint Smithers.
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