The end of an era. After 15 solid years talking things up Anatole Kaletsky, the Times’ economic pundit, is now talking things down.
He declares himself to have been “at the optimistic extreme of economic opinion in Britain” since Black Wednesday in 1992, “when British economic policy was liberated.” But now Kaletsky finds himself at the opposite end of the pundit spectrum.
Running through, Rumsfeld-style, the known-risks, the “known-unknowns” and then finally the “unknown-unknowns,” the Times man canters through the credit crunch, the housing market, tax changes, and the like.
And then he gets to an unsettling conclusion:
Which brings me finally to the “unknown unknowns”, which have suddenly made the economic outlook for Britain even more uncertain, but also more alarming. All of the policy U-turns of the past few weeks, the random and uncoordinated tax reforms, the loss of confidence in the Bank of England resulting from the Northern Rock crisis and the signs of panic in the Government in response to Tory gains in the opinion polls raise serious questions about the sustainability of the economic framework that has kept Britain so prosperous and stable since 1997.
Suppose a panic-stricken Prime Minister appoints a political crony as governor of the Bank of England. Suppose that public sector unions, sensing the Government’s weakness, refuse to accept the cutbacks in public spending that the Treasury has planned. Suppose the recent tax reforms blow up in the Government’s face and end up yielding less revenue than expected.
After the events of the past few weeks, it is easy to imagine such “unknown unknowns” — and all of them spell bad news.