Official forecasts for Britain’s economy should be taken with a pinch of salt after a Budget overshadowed by the OBR’s gloomy outlook

THE official forecast for Britain’s economy may be gloomy but we really should take projections for poor growth with a pinch of salt.

Who could forget the almost complete failure to predict the 2007-2008 crash or the lightning speed of technological change by these economic crystal ball-gazers? They are clearly no Mystic Megs.

And while the Office for Budget Responsibility’s forecasts about the prospects for the British economy have been wrong before, they seem to have taken on the status of holy writ at Westminster.

As well as the OBR, there are also analysts from the Bank of England, all manner of international bodies and many more employed in the private sector.

But it is the OBR’s sacred numbers that are accepted by the Chancellor when he presents his Budget.

On Wednesday, Philip Hammond announced that the OBR has revised growth sharply downwards, which prompted an outpouring of doom from the Government’s critics.

Britain will be like the debt-ridden Japanese economy, with negligible GDP growth for years to come, apparently. It would seem the OBR thinks we are turning Japanese.

Perhaps the numbers will be right this time and doom awaits Britain as it goes through Brexit. But the excessive faith put in these projections has warped public policy for far too long.

Before the crash they created complacency that extra spending was affordable when it wasn’t. And they encouraged the banks to ignore the warning signs that something was going badly wrong with lending.

This fixation of looking into the future has also distorted the public’s understanding of how economies really grow — not by government decree but by liberating entrepreneurs to create businesses that will develop in ways no statistician can predict.

The Georgians managed to kick-start the Industrial Revolution without the aid of economic forecasting.

The future cannot be plotted according to data points on a spreadsheet read out by ministers.

Gordon Brown must take a lot of the blame for this trend. He took his predecessor’s fiscal framework and turned it into a fetish of announcing long-term projections to bolster his reputation for frugality.

Numbers that until then had been collated quite cautiously by the Treasury, and treated as speculative by most Chancellors, were used to underpin Brown’s overconfident Budgets.

His self-assured glimpse into the future in his eleventh and final Budget in 2007 actually has a comic air when read today. His projections turned out to be about as useful as a chocolate teapot.

As Michael Portillo, the former Tory Cabinet minister, could have told him, futurology is futile.

During his time as Chief Secretary to the Treasury, Portillo described how he struggled to get from officials an accurate account of what happened the previous year, let alone forecast what would happen five years ahead.

Chancellors such as Nigel Lawson were wary of long-term forecasts.

If he had made the mistake of his successors when giving his final Budget in 1989, he would have missed, among other things, the end of Communism, a harsh recession and Britain’s expulsion from the European Exchange Rate Mechanism.

So how can the OBR look forward to 2022 and call it with any confidence? There’s Brexit to come, for a start.

As a supporter of leaving the EU, I’ve always acknowledged that it could get bumpy on the way out, but it could just as easily go surprisingly well — just like the past 18 months since the referendum.

Unemployment is at 4.3 per cent, its lowest level since 1975. There were a record number of foreign inward investment projects — 2,265 — in the year following the Brexit vote. A report published recently said 70 per cent of Europe’s tech investors are based in London.

Britain’s future prospects rest on a whole host of factors even bigger than Brexit, including whether we realise our potential as a leader in areas such as bio-tech.

By investing £270million into new technologies, Philip Hammond stepped up and did really rather well.

In political terms he saved his job (for now) with a cleverly constructed budget.

But it will be seen by most observers through the prism of those dismal growth projections that experience suggests distract us from the business at hand.

This Chancellor is no wide-eyed optimist, but he is a realist who understands entrepreneurialism.

He was bang on when he said that those who underestimate Britain do so at their peril.

The future, as he said, is not preordained, it is what we make it.