As 2017 ends, any objective observer should acknowledge that the British economy is performing quite well. The drumbeat of negativity continues – and won’t abate in 2018. The hard data, though, keeps confounding the doom-mongers.
I’m not arguing that the UK is firing on all economic cylinders. Wage growth remains subdued and public borrowing, at around £50bn a year, is still dangerously high. There are also specific weaknesses, including our skills shortage, low business investment and the inability of far too many to buy a home.
The growth numbers, though, have been solid. The UK expanded 0.4pc during the third quarter of 2017, according to last week’s official numbers . We’re on course for 1.8pc growth during 2017 as a whole, just below 1.9pc in 2016. During the three months to December, in fact, preliminary data suggests output accelerated. A new CBI survey of 650 manufacturing and service-sector companies puts the balance of firms reporting a rise in economic output at 19pc, up from 6pc in the survey before.
Fresh Bank of England research also shows UK firms using a weaker pound to ramp up exports, increasingly to non-European markets. This helped narrow our current account deficit by £3bn between July and September, with exports showing 10pc year-on-year growth. Yes, our external deficit is still £22.8bn, equivalent to 4.5pc of GDP. But that’s down from 6-7pc of GDP in 2014-15.
There was a slew of negative economic headlines just before Christmas. But these related mainly to projections from some of the same international organisations that wrongly forecast Britain would suffer badly immediately after any Brexit vote. In December, for instance, the US-based Rand Corporation predicted the UK will be worse off under “nearly all” possible Brexit outcomes – a conclusion repeatedly reported across countless news bulletins.
Most people dont see Brexit having an impact on their job This report from Rand, which receives EU funding, employed similar economic modelling to that used by HM Treasury ahead of our June 2016 referendum. That Treasury “study” predicted a vote to leave the European Union would produce “an immediate and profound economic shock” – a conclusion then Chancellor George Osborne repeatedly asserted as “fact”.
Rand also failed to consider that the UK could sign free-trade agreements with a range of non-EU nations – even though this is the Government’s stated aim, and numerous nations have expressed interest in such deals. What Rand did conclude, in a finding that failed to feature on the news bulletins, was that if the UK does secure its own free-trade agreement with both the EU and the US – which is only possible if we leave both the EU’s single market and the customs union – that produces the best post-Brexit outcome of all.
Throughout 2018, the UK economy will continue to be reported through the prism of Brexit. Good economic news is likely to be downplayed and bad news over-stated – at least by the mainstream broadcasters. Any proposal the UK makes in our ongoing Article 50 talks will no doubt similarly be presented as “incoherent” or “disastrous”. Brussels’ attempts to make leaving the EU difficult and painful, meanwhile, will naturally be judged “canny” and “reasonable”.
To read Liam Halligan’s piece for the Daily Telegraph in full, click here.