Across the Western world sharply rising prices, static or declining salaries, and a decade of low growth has pushed the economy to the top of the political agenda. Pundits and politicians on all sides claim to have the answer, while governments and bankers put forward precise predictions for the economy. But is this an illusion? Predictions are frequently wildly wrong. Central banks and governments failed to predict inflation, which was rising long before the Ukraine conflict. While a recent IMF study showed that out of the last 150 recessions, economists failed to predict 148.

Should we conclude that we don't understand the economy and see economic predictions as random guesswork? Do we need a new economic theory that moves beyond Keynesian demand management, supply side reform and tight monetary control, or is the very idea of a mathematically precise economic theory a pipedream? Or can we jettison the pretence of precision, while seeing our current broad brush framework as essentially right and a powerful insight into the economy?

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