Economic warnings of doom and devastation – such as those emanating from the Remain and also now the Leave camps about Brexit – constantly under-estimate our timeless ability to adapt to whatever challenge confronts us, writes Bill Jamieson
Catastrophe! Devastation! From both sides of the Brexit war – Leavers and Remainers, pro-Chequers and anti – have come dire prophecies of apocalypse.
If you thought Boris Johnson laid it on thick, comparing the Chequers proposal to a “suicide vest” around the British constitution, brace yourself for our very own Dr Doom – Mike Russell, Scotland’s Minister for Brexit.
Leaving the EU without a deal, he warned MSPs this week, would “result in chaos”; we faced a choice between death and destruction – a Chequers plan “unpractical and unworkable” and a “no deal” that would be “impossible and unthinkable”, he added.
Spare a thought for poor Business, Fair Work and Skills Minister Jamie Hepburn trying to raise our spirits on the same day with figures showing Scotland’s unemployment rate had fallen over the latest quarter to 4.1 per cent. “We continue”, he added, “to outperform the UK with an employment rate of 71.5 per cent for women, higher than the UK rate of 71.0 per cent, and an employment rate for young people of 56.2 per cent, higher than the UK rate of 54.7 per cent.”
Good news all but drowned out as Mr Russell in the belfry kept ringing the booming bells of apocalypse.
Gloom and despond abounds these days. As if this was not enough, lengthy commentaries in print and broadcast media this week have marked the tenth anniversary of the collapse of Lehman Brothers and the onset of the global financial crisis. We were reminded of the miseries of a lost decade, the years of unsparing austerity, the glowering dark menace of recession and The End of Everything.
Back then we could barely gather our thoughts but for the dire warnings of deep recession, soaring unemployment, collapsing house prices, business and investment collapse. We were amply warned we would be suffering for a generation. Eminent economists and commentators lined up on BBC TV Newsnight to warn of privation, hardship and decline – warnings now being repeated today in the approach to the Brexit deadline. For our economy was then – as we are told it is now – experiencing one of our darkest hours.
Painful losses were endured in the financial crisis, with the loss of livelihoods and the failure of many businesses as panic set in. Banks brought down the shutters – when the shutters were not brought down on them – and governments sought to cut spending as public debt and borrowing soared.
But ten years on, how stand those dire prophecies of economic misery and collapse? Events have not quite panned out in line with the grim forebodings. We skirted recession but avoided the worst. There was no soaring unemployment, no collapse in house prices and the stock market.
Across the UK, there are 32.4 million in work, up more than 261,000 on a year earlier and close to an all-time high. Unemployment is down 95,000 on a year ago and the lowest it has been since December 1974-February 1975.
In Scotland, the jobless figure fell to 113,000 in the May-July quarter, down 6,000 on the previous three months, taking the rate down to 4.1 per cent. Across the UK wages, excluding bonuses, grew by a faster-than-expected 2.9 per cent compared with a year ago. And estimates of economic growth have moved up while, in Scotland, private sector output accelerated to a four-year high last month as new orders continued to pour in. The Royal Bank of Scotland Purchasing Managers Index (PMI) found new business expanded “solidly” in August, and at a faster rate than the UK average.
Pension funds and ISA savings did not collapse as many feared. In fact, the UK stock market as measured by the FTSE100 has rallied more than 80 per cent since the immediate aftermath of the Lehman collapse and brushed an all-time high earlier this year.
House prices did not collapse. After an initial fall, average prices across the UK have risen by 48 per cent since March 2009. In Scotland, house prices have continued to rise, with an average increase of around five per cent in the past 12 months. According to Savills’ latest research this week, transactions above £250,000 increased from 9,000 in the first six months of the year five years ago, to a record 19,250 during the year to end June. The firm is forecasting a 17 per cent increase in Scottish house prices by 2022, compared with seven per cent in London and 14 per cent across the UK as a whole.
Meanwhile, retail sales in Scotland have grown for the fourth successive month with sales up by 0.5 per cent on August last year.
Commentaries on “the lost decade” make much of the plight of high street retailers and bank branch closures. But these surely owe much more to changes wrought by the internet and digital technology. Millions now prefer to conduct their bank transactions online. Add online sales to the retail figures and the picture looks less dire: online purchasing is up more than 15 per cent in the year to July and is now thought to account for 18 per cent of the retail total.
Death of the high street? This week, smartphone giant Apple unveils eagerly awaited additions to its mobile phone range to maintain the pace of 216 million units sold world-wide last year. When the new phones hit the high streets, excited queues will form – undeterred by the price. The old iPhone X started at £999 and the more expensive version came in at £1,149. Even higher prices are now expected. They are now a key accessory to both leisure and business activity and have profoundly altered the way we live and work.
The problem with warnings of economic doom and devastation is that they constantly under-estimate not only our hunger for the new but our timeless ability to adapt to whatever challenge confronts us. Innovation powers on. From iPhones to electric cars, 3D printing to robotics, life has moved on since Lehman – and without the jobs destruction predicted.
There may be trouble ahead. There always is. But ruination and collapse? History suggests otherwise.