Irresponsibility

John Maynard Keynes famously batted away questions about the long term outlook by noting that "In the long run, we are all dead".  Now Robert Chote,  head of the OBR*, the UK Government's rather pointless "independent" forecasting agency, has concocted a variant, on the lines of "in the really long run, we're all up the creek".


According to Chote,  the impact on the UK of a messy collapse of the Euro could be not just long term, but permanent: 


“If you have a permanent impact on the productive potential of the economy, then it will have a permanent impact on the ability to raise tax revenue and a permanent impact on public finances,” he told the Daily Telegraph. (Full story here). 


Oh, please.  Over the past century, the UK has endured two world wars with shocking loss of life (and mass destruction of productive capacity and infrastructure in WW2); the Great Depression; loss of the Empire; and Sterling's demise as a global medium of exchange.  And yet, living standards have risen sharply (if not steadily), and reached their highest level ever just before the financial crisis hit in 2008.  Is Robert Chote really suggesting that recovery from a Euro collapse will not just take longer than recovery from all of those shattering events, but may in fact NEVER happen? Because that's what "permanent" means.  It's a ridiculous assertion, and one that someone in Mr Chote's position should have known better than to make.   


 * Office for Budget Responsibility