Bank's Shafik attacks economists' on uncertainty in final speech

A senior official at the Bank of England has attacked the performance of economists in the wake of the Brexit vote, urging them to be more honest in their attitudes to uncertainty.

Minouche Shafik warned confidence in experts was at an "all-time" low, in an era of social media power and fake news, in her final speech as deputy governor for markets and banking.

She (Munich: SOQ.MU - news) made her remarks against a backdrop of widespread criticism of her current employer's own forecasting record - more recently over the Bank's commentary before and after the referendum.

Bank governor Mark Carney came under fire during the campaign from Leave supporters for suggesting a vote to exit the bloc could trigger a recession .

The Bank has since been forced to revise sharply upwards its forecasts for UK growth after consumer spending proved resilient.

While Mr Carney himself has admitted that the Bank failed to foresee that, its chief economist grabbed headlines when he described its Brexit predictions as another "Michael Fish moment" for the profession, after economists missed the financial crisis.

Andy Haldane's comment was a reference to the infamous weather forecast in October 1987 in which the TV weatherman dismissed warnings that a hurricane was "on the way".

Mr Haldane told an audience in London last month the criticism was a "fair cop".

"We had foreseen a sharper slowdown in the economy than has happened, in common with almost every other mainstream macro forecaster...If you look at how the consumer performed during the course of the last year, it's almost as though the referendum had not taken place."

While the Bank was not alone in its predictions of a sharp slowdown - given similar forecasts from the Treasury, the International Monetary Fund and others - he has admitted the profession was "to some degree in crisis" and economic models needed an overhaul.

Ms Shafik argued it was the attitude to uncertainty among economists that needed work - suggesting more honesty in future.

"We need expertise more than ever. But confidence in experts is at an all-time low."

She added: "Rather than pretending to be certain and risk frequently getting it wrong, being candid about uncertainty will, over the long term, build the credibility of experts."

She said technology and social media had also weakened trust in academics and experts, while the rise of "fake news" was adding to scepticism.

Ms Shafik will leave the Bank for the London School of Economics at the end of the month.

She will be replaced by the Bank's current chief operating officer, Charlotte Hogg.