Bill Jamieson: Economy is defying the Brexit doom-mongers

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A no-deal Brexit may be scary, but our politicians are offering little in the way of comfort – even though we’ve just had some good news on the economy, writes Bill Jamieson

Seldom in our lifetimes have voters across the UK been so beaten and cajoled into a mood of despair about our economy and our prospects. We are told we are on course for a terrible reckoning. Barely a day goes by without some fresh warning of economic catastrophe and disaster should we arrive at 29 March with ‘no deal’ on the UK’s departure from the EU.

The Grim Reaper seems cheerful compared to Britain's current political class (Picture: Ian Rutherford)

The Grim Reaper seems cheerful compared to Britain's current political class (Picture: Ian Rutherford)

From the Scottish Government to the CBI, from business moguls at Davos to the Bank of England, from the leaders of Labour, the Lib Dems, the Greens and even within the Conservative Cabinet, the doom-mongering has swollen into a daily cacophony.

Hope, never mind optimism, is a no-no.

In such an atmosphere, what business would not by now have put expansion plans on ice and retrenched in the face of forebodings that we are heading for trauma and disruption?

But with less than 70 days to go to our Date with Disaster, the most extraordinary figures have been released this week. Given the backcloth of dire warnings, I am truly at a loss to explain them. Perhaps readers might be able to help.

Labour market figures for the three months ending November 2018 show numbers in work across the UK rising to their highest level since records began in 1971. Far from firms cutting back on hiring, they are continuing to recruit. The UK’s employment rate is now at a record 75.8 per cent. This puts the estimated number of people in the UK working, aged 16 years and older, at 32.53 million – a 328,000 increase on the same period in 2017.

Private sector employment is now up by 3.8 million since 2010. Andrew Wishart, UK economist at Capital Economics, said the figures were “reassuring, showing no sign of any hit to firms’ hiring ambitions due to Brexit”.

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Nor has Scotland missed out – despite the warnings of doom and catastrophe from First Minister Nichola Sturgeon and her Brexit minister Mike Russell. Scotland has seen a 0.3 per cent rise in the employment rate, rising to 75.3 per cent, with unemployment falling to 3.6 per cent, down 0.4 percentage points on the year and the lowest rate on record for Scotland. Youth unemployment in Scotland at 8.4 per cent is down 1.2 percentage points from a year ago.

Are all the job vacancies surely not filled by now? Not a bit. There were a record 853,000 vacancies in the three months to December. Companies are desperately scrambling to find skilled labour. Says Scottish Chambers of Commerce chief executive Liz Cameron: “These are positive statistics for Scotland. Against this backdrop, we are mindful that job vacancies are also rising, with many businesses reporting difficulties in finding and hiring the skills and talent they need.” Now compare this to the press release put out this week by the CBI Scotland: “The devasting long-term economic impact of a ‘no deal’ Brexit on Scotland”, it begins, “has today been laid bare in fresh analysis of Government figures by the CBI. The study reveals how Scotland could be among the areas of the UK significantly exposed to the economic fallout from leaving the EU without a deal with an estimated annual loss of output worth £14 billion by 2034.” Never mind the more hopeful reality of Scotland’s labour market today – let’s wring our hands over a projection of morale-sapping misery 15 years ahead!

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The employment figures were not the only stunning piece of news on our circumstances this week. Pay growth across the UK has reached the highest level for a decade. Annual earnings growth climbed to 3.4 per cent in the three months to November. Workers’ real after-inflation earnings growth is also looking healthier, rising to 1.2 per cent in the three months to November from 0.1 per cent in June. As for inflation, it is now down to 2.3 per cent despite the weaker pound. There was reassuring news, too, on public finances. While Public Sector Net Borrowing saw a year-on-year deterioration in December, this was only the second month in the first nine months of fiscal year 2018/19 that this has happened and was due to the UK’s net contribution to the European Union being £1.5 billion higher than in December 2017. The budget deficit in the first nine months of the fiscal year at £35.9 billion is down 26.7 per cent year-on-year and the best performance for 16 years.

Now, if you had asked anyone a few years ago what were the three essential ingredients for prosperity, they would have replied: full employment, low inflation and rising real wages.

Today we have all three, though you could be forgiven for not having spotted this in the daily cascade of doom and foreboding – with the BBC to the fore. The doom-mongers are blind to the continuing evidence of markedly low retail price inflation. Instead, we are bombarded with assertions of selected price inflation “due to Brexit”.

Now there is reason to be apprehensive as to what a ‘no deal’ will bring. Firms have been stockpiling in the event of supply disruption and we cannot know whether the contingency plans to avoid long delays at ports and motorways will be effective. With the lack of clarity over future trade arrangements with the EU – this after two and a half years of deliberation – business frustration is understandable. But the daily outpourings from Westminster and Holyrood give no comfort. The political class seems determined to sap household morale and crush business confidence. Few dare express any hope, never mind optimism, about our future. Perhaps some terrible collapse is lurking just around the corner. But one cannot but wonder that if this is the mindset being battered into us, how did we possibly survive real crises and challenges in the past.

I honestly wish I had explanations for this extraordinary paradox. It might be due to the UK’s rising population and fewer people being classed as economically inactive: the number of economically inactive people fell by 100,000 to 8.6 million, a rate of 21 per cent, the lowest on record. Another, contrary explanation, might be that the Brexit imbroglio has discouraged migrant workers from coming to the UK.

But I would say it is the biggest conundrum of our age as a doctrinal pessimism reigns supreme.