The Bank of England vs the Office for National Statistics

In today’s paper I report on the Bank of England’s growing sense of frustration over the performance of the Office for National Statistics. Last month, the ONS revealed that its Blue Book of national accounts will not be ready until the 23 November, despite being due on 1 November. That rather messes up the Bank’s preparations for its crucial November Inflation Report, which contains its official growth and price forecasts. This is the second year in a row that the Blue Book has been delayed. The Bank made its displeasure clear at last year’s delay in its official 2010/11 evaluation of the ONS.

But it’s not just a complaint about timing. According to the former member of the Monetary Policy Committee, Andrew Sentance, bank policymakers and staff are also doubtful about the quality of the ONS’s actual output, in particular its GDP estimates. Sentance says that this explains why the Bank effectively publishes its own estimates of past GDP alongside those of the ONS in its quarterly Inflation Reports.

This is from the Bank’s August report:

You can see from the thick green line that the bank actually thinks GDP did not fall in the recession by as much as the ONS estimate, which is represented by the thin black line. The Bank also seems to think GDP has recovered rather better than the ONS.

It’s an interesting dispute. And as I said in the paper, though the row might all sound a bit academic, it actually has implications for monetary policy making, and thus everyone in the country.

However, it’s important to note that not everyone thinks that the ONS is the one letting the side down. Another former member of the MPC, Danny Blanchflower, argues that the Bank should look at its own faults first:

“They can keep saying things like ‘the ONS has got it wrong’ but actually the alternative explanation is that they [the Bank] has got it wrong every single time. The reality is that the Bank missed the recession and missed the recovery. They’re totally embarrassed because every time the ONS brings them stuff, it’s exactly the opposite of what the Bank says it’s going to be. I was always on the ONS’ side. I kept saying ‘the reason you’re annoyed is because you think it’s going to go one way and they keep doing it the other way’. It’s a classic example of ‘I couldn’t possibly be wrong, you must have done it wrong’. I’m extremely sympathetic with the ONS.”

It must feel pretty lonely at the ONS these days. But at least they’ve got one vocal champion!

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