Monday 28 July 2014

Weekly Wrap Up: IMF & Selective Criticism

On Thursday, following the publication of the International Monetary Fund’s forecast on global economy, tales of Britain’s economic growth were published on the front pages of the various media outlets, boosting the confidence of politicians and public alike. The UK is expected to grow by 3.2% this year, a figure ahead of all G7 countries, and is the second fastest growing economy on the list. The fund also increased its UK growth forecast for 2015 from 2.5% to 2.7%, compared to original prediction of 2% in October of last year. With the forecast published just seven months before the UK General Election, it will certainly have a strong impact to the dynamics of all forthcoming political campaigns.

Politics aside, the public’s perception of the IMF is also an interesting phenomenon in itself. It is not hard to observe how punishing the media has been on the IMF, following the publication of its most recent forecast. Commentators have emphasised how the IMF is proved “wrong” with current figures, arguing that the UK has made the right choice by avoiding to changing its economic policies accordingly to IMF previous predictions.

Only one year ago, the IMF’s Chief Economist Olivier Blanchard accused George Osborne of “playing with fire” by persisting with austerity. Following the fourth upgrade that the IMF has made on the UK economy since the comment was made, Managing Director of IMF, Christine Lagarde, admitted that the fund had “got it wrong” on the UK.

Scepticism towards the IMF is not unusual. Undeniably, the IMF is one of the most powerful super-governmental bodies in existence, and perhaps not a very well-received one. As a Bretton Woods organisation, the IMF has dictated public spending patterns in the past, and arguably has caused structural changes in some parts of the world, some of which have received strong criticism from the public. Until recently, some of the economic and social consequences caused by the IMF’s induced policies have been repeatedly cited by academics and the media.

On this occasion, however, the public has been largely biased towards the recent IMF forecast, compared to any forecast in the past. The current forecast has even been used as evidence against previous IMF forecasts.

So why has this forecast been so popular? The IMF could be equally as wrong about its predictions now as it was this time a year ago, and yet the public has happened to favour this most recent forecast, portraying it as being more credible than the previous forecast.

There are two explanations for such selective criticism. The first could be a defensive explanation; the UK media has favoured the positive figures which not only prove that the nation can succeed, but which also enhances public spirit. Secondly, the current phenomenon might be a reflection of the rightward lean of the media and its support of the government’s austerity policy.

Image courtesy of Owen Phillips / IMF
Both of these explanations are possible. Either way, the phenomenon reflects how powerful public perception is in determining the way that data is interpreted. This once again indicates the importance of the communications industry in today’s world: in a world where data could only tell so much and the role of the interpreter is critical. Indeed, last week’s news about the IMF could now serve as an example of when perception has triumphed data in deriving conclusions amongst the public.

Is the future bright for solar? This question was considered and debated at another excellent EcoConnect event hosted by environment focused lawyers Pinsent & Masons. The message was that although the sector has potential, it requires greater consistency of policy. We also met with some of the City’s finest accountants at Crowe Clark Whitehill to celebrate Paul Blythe's promotion, as well as exchanging ideas with the team at Shore Capital. This week’s market lunch ran with a China theme; one that proved to be incredibly topical in light of the recent wave of Chinese companies joining the London Stock Exchange. Of course, the London Stock Exchange was well represented at the lunch to share its opinion, with other city advisers.

Law firm Addleshaw Goddard has boosted its real estate practise with the appointment of Stewart Womersley as Partner, who joins from Nabarro. And, as mentioned above, Paul Blythe has been promoted to corporate finance partner at audit, tax and advisory firm Crowe Clark Whitehill. Paul has been at CCW for coming up to 4 years, where he has advised on 35 UK public market transactions.

"Bullish" - expecting the level of economic activity in general to rise

This weekend Japanophiles – yes, that word exists – will once more be celebrating in force this weekend. If you are a fan of the food, culture and music of this amazing country then make your way over to Earls Court for the weekend-long Hyper Japan 2014 festival.

Already feeling nostalgic for Rio? Then relive the Carnival vibes by celebrating the two year anniversary of the London Olympic opening ceremony at the Great British Carnival in the Queen Elizabeth Olympic Park. This feast of colours, costume and music will mark the anniversary of the fantastic display of British local talent.

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