The art of forecasting
Does your Bank Manager ever ask you to project the future and then castigate you when you get it wrong? Here are a few snippets that you may wish to remind them of.
In a speech on 10th December 2003, Chancellor Brown stated that in April 2003, only eight months previously, he had calculated that the Country’s borrowing requirement was £27 billion, but that now he was having to increase that by £10 billion (37.03%) to £37 billion. This was without any significant policy change, reduction in the anticipated growth of the Country or any new expenditure.
Furthermore in the March 2005 Budget speech he forecast growth of 3.5% for the forthcoming year. Then in his pre budget report in December 2005, just eight months later, he had to revise this figure and halved his forecast to 1.75%, again without any significant change in circumstances.
The Government estimated that in the two years following the admission of the Eastern European states to the EU in 2004 there would be 26,000 immigrants from those Countries to the UK. The actual figure announced in August 2006 was 430,000.
It’s not only the Government who can get their sums wrong. The Dome was predicted to have an annual attendance of 12m in its first year (2000). In fact attendances were only half of that, at 6m.
The London Museum in Docklands estimated 250,000 visitors a year to justify its £14m heritage lottery grant. It subsequently reduced this figure to 135,000 but the actual attendances in the year, after its 2003 opening, were only 100,000.
The Maritime museum in Cornwall was little better, opening in the same year, it had 120,000 visitors against a predicted figure of 200,000.
Conversely the Tate Modern forecast maximum annual attendances at 1.8m but the figure was actually over 4m.
Your own predictions may not have been right, but I suspect that they will not have been as bad as the ones above.