Outlook: Better just say nothing, Mr Brown

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The Independent Online
Just as one row simmers down for Gordon Brown, another merrily comes to the boil.

The simmering-down row is the fuss over the Chancellor's decision to cut his 1999 growth forecasts on the eve of October's Monetary Policy Committee meeting. And the row on the horizon? There's a good chance it will be next week's Treasury inflation forecasts - which will be released, by sheer coincidence, on the eve of November's Monetary Policy Committee meeting.

So far, the Treasury has been remarkably tight-lipped about revisions to its inflation forecasts, details of which will be revealed - along with official confirmation of the new growth estimates - in the Chancellor's pre-Budget speech a week today. It is an absolute certainty that they will be cut - the only question is by how much.

Since the last inflation forecast back in March, the world economy has slowed considerably. In addition we now know that the official earnings data which fed into the Treasury model overstated the rate of UK wage inflation in late 1997 and early 1998.

So what is the likely extent of any revisions? Back in March the Chancellor - correctly - forecast that inflation would stay above target for much of 1998, but stated that the outlook for 1999 was more benign. In particular, Mr Brown forecast that the underlying rate of inflation would fall to target by mid to late-1999.

All this seems to point to the likelihood of Mr Brown - on the day before the Bank of England's Monetary Policy Committee next meets - forecasting that inflation will undershoot its target in 1999. It hardly takes a public relations genius to figure out how that might be interpreted.

All this begs a wider question. How should the Government go about making and announcing economic forecasts when the markets are still trying to figure out what independence for the Bank of England really means? Steering clear of making announcements on the eve of MPC meetings would be one piece of advice.

The trouble is that it is virtually impossible for Mr Brown to say anything about the economy at the moment without someone or other complaining that the independence of the Bank is being compromised, or that he should never have surrendered control of interest-rate policy in the first place. But then, that's politics for you.

WHAT A trying business politics is

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