In the latest series of that splendid panel show QI there is at least one question per show in which the answer for all – even the apparently all-knowing Stephen Fry – is "Nobody Knows".
That basically sums up where we are right now in prognosticating about the outlook for the UK and Scottish economies – it is always the case in economic forecasting that "nobody knows" the outlook with anything approaching certainty. The difference now is the degree of uncertainty is markedly greater than in previous decades. The extent of finger-crossing among politicians and economic policymakers is, or should be, widespread.
In this context, the most dangerous of beasts is the politician or economic policymaker who does not know that he does not know.
Turning a blind eye to the degree of uncertainty could well mean sticking for far too long to any particular policy line, in the mistaken belief he or she fully understands the working of the economy as of now and hence can be confident about the way in which that policy will enhance prospects.
A couple of weeks back the economic data – including Scottish gross domestic product data (GDP) for the final quarter of 2011 – was showing marginal signs of an improving trend. It was possible to hope that double dip would be avoided and a gentle upward trend would be seen through this year and into 2013. Unfortunately we now know that, at least on the basis of the first estimate, output in the UK economy declined in the first quarter of 2012, a second successive quarter of decline spelling out recession once more.
Further, two key surveys out last week pointed to a slow start to the second quarter. I have always taken the Purchasing Managers' Surveys very seriously. They are up-to-date, based upon views and facts from the front line and with a good track record. For manufacturing, the index fell sharply in April, down to near the stagnation level, with a worryingly sharp fall in export orders from the US and Asia as well as Europe.
Never read too much into one survey, but this does not bode well for manufacturing exports for the months ahead.
The service sector equivalent index also fell, by significantly more than expected, signalling that growth, while still positive, was showing a marked deceleration from the rate in first quarter. At least new orders were somewhat encouraging.
Taking these two surveys together suggests an economy continuing, at best, to bump its way along the bottom.
The continuing combination of weak growth and surprisingly high inflation has led the economists at Fathom Consulting (old Bank of England hands) to declare the UK as "back at the bottom of the G7 economy class".
It certainly is a sad state of affairs that we cannot be sure of any real pick-up this year when our output level remains 4% below the previous peak.
The response from policymakers has been predictable. Sir Mervyn King, Governor of the Bank of England, has chastised himself for not being active enough at the time of the credit crunch in calling for banking sector and general credit restraint. But he failed to bring forward new ideas as to how to dig the economy out of the hole into which it has fallen post-crunch. In the meantime, Chancellor George Osborne has admitted that the "presentation" of his Budget went awry.
Strange, is it not, that politicians so often admit error in "presentation" without due attention to the question of whether the policies themselves are erroneous.
We always need to remember – as does said Chancellor – we are where we are before any substantial impact of his fiscal tightening regime feeds through. The real question that both the Governor and the Chancellor should be addressing is whether there is any new wrinkle to policy that could be considered to aid recovery, while at the same time dealing with the genuine problem of excessive public sector deficits.
Certainly ultra-low interest rates alone will not generate significant acceleration of business investment, consumer demand or economic growth. It also appears that successive doses of Quantitative Easing (QE) – pumping liquidity into the system – are not impacting on the "real" economy.
The way forward should include a somewhat less "hair-shirted" approach to fiscal retrenchment – given our relatively low public sector debt to GDP ratio we are not Greece or Ireland. It must also include supply side measures to encourage and facilitate productivity-enhancing business investment and exports. But I look to those great brains at the Bank of England to see how business credit can be encouraged, perhaps making use of the QE resources.
The banking sector is understandably risk averse while the business sector is concerned about the cost (and availability) of credit and also prospects for market demand at home and abroad. Some gentle encouragement via support for credit must make sense as part of the overall package. So too should more public sector infrastructure investment – where again the question of how to finance looms large.
l Jeremy Peat is director of The David Hume Institute
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