Wealth creators can’t afford to get bogged down by Brexit’s petty squabbles, but they can’t ignore much more serious threats either, writes Bill Jamieson.
Amid the noisy, horrendous, exasperating politics of Brexit, we have not been short of earnest warnings about the toll it is taking on business and growth. As the daily news has been dominated for almost three years by disputation, division and now mind-numbing gridlock, household and business confidence has been battered. And amidst all this have come earnest warnings about rising unemployment, plunging investment, standstill growth and “lost” GDP.
And yet the striking feature of our economic performance since 2016 is less how damaged it has been by the constant, energy-sapping noise of the Brexit battle, but how resilient it has been. Adverse effects are evident. But recent growth numbers suggest the damage has been not nearly as severe as many expected.
Across the UK, GDP rose by 0.5 per cent quarter-on-quarter in the first three months of this year, albeit distorted by stock-building ahead of an anticipated Brexit Day on 29 March. Household consumption, government consumption and investment all contributed to GDP growth.
Here in Scotland, latest data show annual GDP growth of 1.3 per cent, just below the UK figure of 1.4 per cent. And in cash terms the 2018 figure is 6.3 per cent, well above the UK level of 3.8 per cent – the fastest rate of growth seen since 2006.
Now come Office for National Statistics figures showing that employment, instead of falling as many feared, continues to keep climbing. UK employment in the latest quarter jumped by 99,000 to 32.7 million – the third highest total since records began in 1971. Meanwhile, unemployment fell by 65,000 to 1.3 million, continuing a general trend which started in early 2012. The UK’s unemployment rate is now lower than at any time since late 1974.
Nor has Scotland missed out. Unemployment here continued to fall in the three months to March, down by 7,000 to reach 89,000. The unemployment rate is now at 3.2 per cent, compared with the UK figure of 3.8 per cent. Real wages continue to grow and interest rates remain at an ultra-low 0.75 per cent.
Now, against the continuing roar of political disaffection at Westminster, talk of an enforced resignation by the Prime Minister, a widely expected humiliation for the governing party in the Euro elections, and a general election likely by the end of the year, what accounts for this resilience? A casual observer of the UK would assume from all the discord that the economy is barely hanging on by its fingertips. And surely, with the heightened prospect of a “no-deal” Brexit, we’re as good as finished.
I venture this explanation. Business folk as a whole do not hang on every twist and turn of the parliamentary motions, indicative votes, the sinuous ambiguities of Labour’s position, the war of words on social media and the interview posturing of Tory leadership candidates. These may dominate the broadcast media, the frenetic TV panel discussions and the weekly shoutathon of BBC’s Question Time.
But they are not what preoccupies the world of business or defines the daily lives of those who comprise it. Broadcast media – the BBC in particular – is obsessed with the manoeuvrings of politicians and their instant availability for a contentious quote. Publicity fuels them.
But are business people as intensely engaged? More likely it is that their concerns are dominated by the demands of everyday survival – ordering, selling, supplying, delivering, invoicing, book-keeping, staff management, cash management, tax bills, form filling, computer glitches and internet disruption.
Of course, the Brexit crisis has induced uncertainty and affected business investment. The continuing poor performance on productivity is testament to that. But the idea that political dispute dominates everyday life is not just to misconstrue the daily reality of life for millions but relegates the importance of business as a mainspring of well-being. And this reality struggles for recognition in the Westminster – and Holyrood – hothouse bubble.
Unlike the political class, we really do have to “get on with it”. That is why, while the political world is raucous and uncertain, the economy is still ticking on. From housebuilding, where completions in Scotland were up four per cent at 18,750 in the year to end September, to retail sales – up 3.9 per cent in April on a like-for-like basis compared with April 2018, with non-food, including online, up by 2 per cent – many in the real world are indeed “just getting on with it”.
Nor is the tendency to assume political discontent as the determinant of economic weakness confined to the UK. France, with so much media attention focused on the disruptive activities of the gilets jaunes, continues to put in an economic growth performance of 1.2 per cent this year, higher than that expected for Germany (expected to grow at just 0.5 per cent in 2019, according to the latest economic forecasts by the European Commission) and Italy, currently growing at just 0.1 per cent year-on-year.
As for the US, riven by denunciations of the Trump presidency and a government shut-down earlier this year, the economy grew by an annualised 3.2 per cent in the first quarter, smashing experts’ predictions.
Now political disputation will always be with us, and so, too, “uncertainty”. But it is the prevailing daily obsession with politics and the demotion of other concerns that account for a darker mood of despair and hopelessness than our economic performance warrants. So deep-seated is the angst and pessimism wrought by the noise at Westminster, were our growth rate to accelerate and average real earnings continue to improve, I sense the “feel-good factor” would struggle to gain a notch.
So should we turn our attention away? There are two looming exceptions to this advice: the escalating tariff war between America and China which genuinely threatens a slowdown in world trade and growth; and here at home, a general election that could well result in a Corbyn government – minority or otherwise. That prospect truly would shake the tree, and trigger not just an investment slump but an exodus.
“Politics” may be accorded an exaggerated impact on everyday business life. But it retains a capacity to be immensely harmful to our prospects.