Who is the best at predicting the UK economy?


It doesn’t matter whether you’re a city or non-city forecaster for predicting the UK’s economic outlook, according to a study carried out by ETX Capital using Government statistics.

From 2015 to 2017, 20 leading economic organisations (an equal split of city non-city forecasters) have delivered annual predictions for the UK’s economy, and now we know who is the most accurate with their estimations.

The Official National Statistics data for GDP Growth Rate, CPI Inflation and the Sterling Index finds that Morgan Stanley, Capital Economics, Commerzbank, Centre for Economics and Business Research (CEBR), Oxford Economics and PricewaterhouseCoopers (PWC) have the most accurate predictions each year.

We take a look at these key performers to take a look at how close they were at predicting each years’ economic outlooks.

City forecasters

There’s no surprise that Morgan Stanley, one of the world’s leading global finance services, Capital Economics, a top independent macroeconomic researcher, and Commerzbank, a global bank and financial services company, have been the top three city economic forecasters over the past three years.

Morgan Stanley was particularly accurate in predicting the CPI Inflation and GDP Growth Rate in 2016 with an average of just 0.15% off the actual figures, while the industry average was 0.47%. The closet of all forecasters, Commerzbank had an average of just 0.33% off the actual CPI and GDP figures over the three years – vastly better than the industry average of 0.61%, while Capital Economics was an average of just 0.1% off the official figures for CPI and GDP in 2017.

 

The above table shows how close the three leading economic forecasters were to predicting the average GDP Growth and CPI Inflation rate figures between 2015 and 2017. For instance, Capital Economics was just 0.1% off the actual figures, compared to 0.4% for the other forecasters.

Non-city forecasters

It wasn’t just the city forecasters making accurate predictions for the economic outlook between 2015 and 2017. Three non-city organisations’ economists were particularly precise in predicting the years’ CPI and GDP figures. They were the leading economics consultancies, the Centre for Economics and Business Research (CEBR), the Oxford University-run organisation, Oxford Economics, and the multinational professional service firm, PricewaterhouseCoopers (PWC).

With all three of these non-city forecasters averaging just under 0.5% off the actual CPI and GDP figures between 2015-17, there’s no doubt these companies excel in forecasting the UK’s economic future.

In 2015, CEBR was an average of just 0.45% off the GDP Growth and CPI Inflation actual figures – this figure was half that of the industry average of 0.9% – while PWC outperformed the rest of the industry in 2016, and Oxford Economics was the top performer in 2017 with just 0.1% off the CPI Inflation and GDP actual figures.

The above table shows how close the three leading economic forecasters were to predicting the average GDP Growth and CPI Inflation rate figures between 2015 and 2017. Oxford Economics being just 0.1% off the actual figures was the top performer.