False hope?

As when football club Chairman express their confidence in a troubled manager, a Chancellor expressing "optimism" over the economy will surely lead to doom?

Alastair Darling today hit back at IMF claims that UK growth will slow to 1.6% in 2008. This is a shade lower than the revised Budget predictions of 1.75% to 2.25% growth over the same period.

In the grand scheme of things, 1.6% growth is still remarkable given the current liquidity problems. But the economy is finely poised; it would still be possible for the UK economy to grow by around 1.0-1.3% this year, and yet register a mild technical recession - 2 successive quarters of contraction (which looks increasingly likely to occur in the US).

Which is the right forecast - the IMF's or the Treasury's - is a nigh-on impossible question to answer. As J.K. Galbraith once remarked that: "The only function of economic forecasting is to make astrology look respectable."

Nonetheless, when times are good, Chancellors need not voice 'optimism' about the economy. Economic optimism is a tool only deployed when times are turbulent. Darling's comments this morning make me slightly less optimistic about this year's porspects by virtue of the fact he felt it necessary to make them.

It's a bit like when Football Club Chairman express confidence in their managers who have dragged the club into a relegation fight - far from being a vote of confidence, you fully expect the manager to get sacked...