Professor John McHale:

I will admit it did come as a surprise. There is no getting away from that. We were aware of the structure of the economy and the importance of multinationals. That has been showing up for a long time in, for instance, the huge gap between GDP and GNP. That was well understood. There were some puzzles that maybe, in retrospect, should have clued us into the fact that something odd was going on. One of those puzzles was the huge surge in corporation tax that we saw last year. There are still some uncertainties about all of the causes of that surge but it does seem that the on-shoring of assets, which was also behind the big rise in GDP, was a contributing factor. Mr. Coffey told me before we started that I should be more cautious than I have been in saying that on-shoring of assets was the real driving force but I think we all know that it certainly was a driving force. Whether there are other factors at work is something we still have to find out. Maybe that should have clued us in a little bit more because we were really puzzled by that. It is consistent with what we saw in terms of this huge on-shoring of assets which also led to a huge spike in GDP.

There is no getting away from the fact that everybody was surprised by the size of that revision and we cannot rule out other surprises. In an economy that is highly globalised with a very significant multinational sector, one is going to get these surprises more often than would be the case in a more sedate, less globalised type of economy.