Why do we bother making economic predictions? They’re nearly always wrong

Hardly anyone spotted how serious the pandemic would turn out to be, even in early 2020, writes Hamish McRae

Seeing what others come up with enables us to clarify our own ideas (PA Archive)

It’s that time of the year when the papers are filled with predictions about the politics, the economy, financial markets, sport, and so on. But we all know not only that many of them will be wrong, as you would expect, but the really big events – the things that change everything – are almost always missed.

Hardly anyone spotted how serious the pandemic would turn out to be, even in early 2020. Cambridge University did a study on this and concluded that while the expert epidemiologists and statisticians did better than the general public, both substantially underestimated the true extent of the pandemic.

That was last year. What about this? Much of what I expected has been wrong: too optimistic about the progress of UK shares and sterling, too pessimistic about house prices and US high technology stocks. So why do it – aside from the masochistic pleasure of making a fool of oneself?