Andy Haldane compared financial forecasts to the famously inaccurate forecast by the BBC weatherman, ahead of the UK’s great storm of 1987, the BBC reports.
He said the profession was “to some degree in crisis” following the 2008-09 crash and the Brexit vote.
The Bank denies claims it gave gloomy forecasts to support the Remain side.
Mr Haldane was speaking to an audience at the Institute for Government in London on Thursday, when he made the comparison between economists and weather forecasters.
He said economic models had been “rather narrow and rather fragile” which were “fine as long as the going was good” but when the world was “tipped upside down” by the 2008-09 crisis, they had failed to cope.
“Turns out, that was a massive oversight,” he said.
“Could we find a way out of the trap? Of course we could. Let’s go back to a different crisis, which is the crisis, not in economic forecasting but in weather forecasting, that resulted from the 1987 storm.
“Remember that? Michael Fish getting up: ‘There’s no hurricane coming but it will be very windy in Spain.’ Very similar to the sort of reports central banks – naming no names – issued pre-crisis, ‘There is no hurricane coming but it might be very windy in the sub-prime sector.’
“Look at how weather forecasting has changed itself in the period since. Actually there has been a dramatic improvement in our capacity to forecast the weather… a revolution in weather forecasting.
“Much more data is being thrown at the problem and that has brought about a transformation. And some of the self same could be true if we move from weather forecasting to economic.”
‘Difficult’ 2017
On being asked whether there had been the economic “hurricane” forecast after the Brexit vote, Mr Haldane quipped: “It’s been very windy in Spain.”
But he told the audience at the Institute for Government: “It’s true, again, fair cop. We had foreseen a sharper slowdown in the economy than has happened, in common with almost every other mainstream macro-forecaster.”
Before the Brexit vote, the Bank of England had warned that leaving the EU would trigger a recession, lead to higher unemployment, a “sharp” fall in the value of the pound and a jump in inflation.
Since the referendum, the UK economy has so far not performed as predicted, with GDP growth at a better-than-expected 0.6 per cent between July and September.
However, the value of the pound has fallen about 17 per cent since Britain voted to leave on 23 June.
Mr Haldane said the latest set of growth figures were a “thoroughly good thing”, putting them down to consumer confidence and the housing market. He said it was “almost as though the referendum had not taken place” and that people’s spending power had not been “materially dented” in 2016.
But he added there were “reasonable grounds” for thinking 2017 might be a “somewhat more difficult year” for the consumer as the fall in the exchange rate began to affect prices. But he said there was “nothing inevitable” about that – it was just a “best guess”.
In 2012, on the 25th anniversary of his infamous broadcast, Mr Fish recalled: “The computer is the thing that did the forecast but… it was unfortunate that the computer lacked a huge amount of data from the area the storm was developing – but of course we didn’t have the mega-computers that we have now.”
