Britain’s underlying strength defies the merchants of doom
Leo McKinstry Daily Express columnist · 17 Ago 2023
‘Latest inflation figures refute the propaganda of pessimism’
THE MERCHANTS of doom have been out in force recently. With almost macabre relish, they paint our nation as a land in the grip of terminal economic decline, where soaring price rises are matched by widespread destitution, and savage indebtedness.
Last week the economist Will Hutton, one of the leading apostles of despair, wrote that “it is time to stop talking and thinking of Britain as a rich country.We are poor and living on the edge.”
The same bleak message can be found right across the political spectrum. So the left-wing think tank the Institute for Public Policy and Research wails that Britain is caught “in a growth doom-loop”.
Meanwhile there are claims on the free market right that, because of the Government’s failure to exploit Brexit and cut taxes, Britain is now less welloff than Mississippi, often said to be the poorest US state.
But these warnings of remorseless decay are grossly overdone. Far from becoming a basket case, the British economy has proved to be astonishingly resilient through all the recent turmoil generated by the Covid pandemic, the energy price shock and the war in Ukraine. As Sir Nigel Wilson, head of financial services giant Legal and General, pointed out this week, Britain’s underlying strength has defied all “the moaning and groaning” from critics. The latest inflation figures also refute the propaganda of pessimism.
IN WELCOME news for hard pressed families, the rate in the year to July came down to 6.8 per cent, a bigger drop than expected and significantly lower than of 7.9 per cent recorded for June.
The pressure of the cost of living crisis was further eased by recent wage increases. Compared to June 2022, pay has shot up by 8.2 per cent when bonuses are included. With the triple lock, that rise has pushed up the value of state pensions, which could soon be worth £11,469 annually.
Although consumer inflation is still too high, these numbers make a mockery of the idea that the economy is sliding ever deeper into crisis.
Just the opposite is true. There is a real sense that, after all the setbacks since 2020, the recovery could now accelerate. Such a prospect was bolstered by the latest official report, published earlier this month, which revealed that the UK economy grew by 0.2 per cent in the second quarter of 2023, with monthly growth in June reaching an impressive 0.5 per cent.
With laughable predictability, many economists – who still eagerly cling to their gloomy scenario of imminent recession – professed to be surprised at these findings, yet many sectors are doing much better than the average. Demolishing Will Hutton’s claim that Britain has “a fading industrial base,” manufacturing output was up 1.6 per cent in the second quarter, while, according to the Society of Motor Manufacturers and Trades, car production was up by a remarkable 16.2 per cent in the year to June.
It is the same reassuring story with business investment, up 3.4 per cent in the second quarter, with air transport seeing an incredible surge of 23 per cent.
In the fashionable narrative of despondency, the Prime Minister and Chancellor are often painted as the architects of economic failure, mixing cruelty with incompetence.
But it could be time to admit that their cautious strategy, with its emphasis on rebuilding public finances, promoting the tech sectors, boosting international trade and tackling inflation, is beginning to reap dividends. They still face huge challenges, particularly in the growth of the welfare dependency culture. It is absurd that when there are more than one million job vacancies, no fewer than 2.58 million people are living on long-term sickness benefits.
SUCH an approach not only involves a spectacular waste of human talent but is financially unsustainable. The Government is spending £53billion on health and disability benefits for working age adults, an increase of £13billion in the last two years.
The Government is confronted by a host of other economic problems such as: poorly run infrastructure projects like the voracious HS2 rail link; the distorted housing market that leaves too many families unable to afford a home; and the stubbornly low levels of productivity in much of the public sector.
Only this week it emerged that at the tax collector HMRC, regularly criticised over its performance, more staff are working from home than during the Covid pandemic.
But, with political will, none of these difficulties are insurmountable. Indeed, Britain’s brighter economic prospects must embolden ministers to act.