Lies, Damned Lies £t Statistics...

It there were any nee'd to confirm Mark Twain's wellworn comment that "there are lies, damned lies... and statistics" the recent kerfuffle surrounding a series of blunders at Britain's National Office of Statistics (NOS)does so. It appears that on several fronts the number-crunchers at the Treasury got their sums seriously wrong and,as a result, the strength of the UK's economic recovery was badly underestimated.

Second-quarter growth of GDP

(Gross Domestic Product) which is seen as a basic gauge of a nation's economic health was double the NOS's originally announced figure. And, as the GDP is a major factor in the Bank of England's decisions on setting interest rates,the miscal culation led to the July cut in the costs of borrowing — a cut from which Gibraltar borrowers along with their British counterparts have benefited, but which was actually unnecessary.

On top of this,initial monthly cal culations of manufacturing output — another pointer to a country's economic well-being — have had to be revised 11 times in the past 12 months. Somewhat belatedly, Brit ain's financial watchdog the Finan- the pound, the US dollar and the euro have swung erratically their movements often defying tra ditional economic rules of thumb.

Accurate statistics — and the forecast ing which they support — are not only vital to central banks and economists cinl Services Authority is to inves tigate how the NOS can have got it wrong so many times.

Accurate statistics — and the forecasting which they support arc not onlv vital to central banks and economists.

Other financial institutions rely on them for forward planning,and in Gibraltar several of our commer cial concerns — including import ers and traders — use sophisticated systems to predict future costs of imported goods and so on.

These take into account such fac tors as the probable movement of interest rates and fluctuations in the currency market.

And if the original data on which they base their predictions is wrong miscalculations are inevitable and can bo costly.

Although for the past two years interest rates in Britain, the United States and Euroland have remain relatively steady and at historically low levels,exchange rates between

Forecasting currency move ments has never been easy, yet for Gibraltar's commercial community — who often source their supplies from half a dozen different coun tries and frequently place orders months in advance — future ex change rates can be significant fac tors in their planning. And,as Neil Tipton, senior offshore treasury manager for Barclays Bank, pointed out during a recent visit to the Rock,financial service provid ers face similar problems.

At a series of seminars — inhouse and for the bank's business clients - Tipton provided an over view of the movements of interest rales and foreign exchange rales... and offered some possible plan ning solutions for bigger local play ers. And he also admitted, that in predicting Forex movements even the experts can get it wrong.

A recent Reuterssurvey to which 51 pundits contributed one-month forecasts was consistently — and considerably — wrong on all ma jor exchange rates involving the dollar, the pound,the euro and the Japanese yen.And if they can be far off the mark,what hope for the Gi braltar trader planning his currency needs several months in advance?

Looking at the prospects for in terest rate changes,Tipton pointed out that"persistent weakness in the US labour market has Wall Street