“The early post-referendum evidence suggested, to the surprise of many – or at least to many of the experts – that Gove was right and they were wrong. There was in fact no immediate recession in the UK after the vote for Brexit; indeed, there was not even a slowdown in growth”.
But just because the experts got it wrong, we should not conclude that they got it wrong:
“[T]his view [that the experts were wrong] looks rather less compelling with the passage of a couple of additional quarters. British consumer confidence is down, with spending in the second quarter of this year falling to its lowest level in four years. New car sales have been down for four consecutive months. The Bank forecasts a whopping 20% decline in business investment in the coming years; Brexit’s champions predicted the opposite.”
You see, the experts were right all along. It’s only the timing they got wrong.
Except, there are two problems with this. The first is that, when it comes to predictions, timing is everything. Anyone can predict that a solar eclipse will happen. After all, they have been happening every so often for millennia. The prediction requires no knowledge of the motion of the heavenly bodies. Accurately predicting when they will happen: that’s what displays an understanding of astronomy.
Secondly, the experts did not predict that the Bank of England would predict a 20% decline in investment. They predicted a severe economic downturn. We know a prediction was right when we observe what was predicted actually happening. Another prediction, in this case of falling investment, is not a confirming observation of what was predicted.
Note, the fact that some of the most dire predictions have turned out to be wrong does not mean that Brexit will be a success. It may be, or it may not be. We don’t know yet, and maybe we never will. But that is a separate debate. For now, all we now is that the initial predictions of an instant recession turned out to be wrong, and looking desperately for some bad news will not rehabilitate them.
Prof Eichengreen is like someone who predicts a solar eclipse on Monday morning and then, when it doesn’t happen, claims that he was nevertheless correct, because now somebody else predicts it will happen on Friday.