Back at the beginning of 2021 inflation was not even a blip on the horizon. Average forecasts for the year were 'no change'. Economists and central banks forecast inflation at 2.2% in the US, 1.5% in the UK. The outturn was three times this level, the highest since the inflation crises of the 70s and 80s, threatening growth and living standards. At the beginning of this year, the same folk were forecasting falls for 2022. Now it looks as if it may reach 10%.
Should we give up on the idea that economics is a science and instead see predictions as politically motivated or exercises in wish fulfillment? Can our economic models be refined so that they deliver accurate predictions of the future? Or is there something about mathematical economic models that fundamentally makes them incapable of predicting the unexpected?
Former Leader of the Liberal Democrats Vince Cable, FT Journalist Izabella Kaminska and economic extraordinaire Juan Castaneda debate the possibility of predictions.