Bill Jamieson: Look away if you want to see a picture of fear and foreboding

From inflation to retail sales to property, the future looks bright. Photograph: Getty/iStockphoto

Really? For business and the economy? It could scarcely be worse. Across the UK, the economy recorded its slowest annual growth in six years in 2018. Growth was 1.4 per cent, down from 1.8 per cent in 2017 and the slowest rate since 2012. According to the Office for National Statistics, quarterly growth also slowed, falling to 0.2 per cent in the three months to December – down from 0.6 per cent in the three months to September.

Growth forecasts for Scotland and the UK have been cut. On the Continent, it is no better, with Eurozone growth even worse than in the UK and Germany on the brink of recession. The world economy is slowing. And overhanging everything is the relentless political shenanigans of Brexit, with no apparent way out of the morass.

Even more prolonged uncertainty is a killer for business. Investment plans have been pulled and expansion put on ice. Much more of this and recession is a distinct possibility.

And yet, amid all of this, there is good news, hard though it can be to discern. So heavy is the dosage of Brexit warnings that accompany most pronouncements, it is more often the warnings, not the real data, that leave the greatest impression.

It is not my intention here to dismiss these warnings, or minimise the damage that prolonged uncertainty is inflicting on business; rather to correct the imbalance.

First – and particularly heartening in view of the fall in sterling, down 12 per cent against the dollar and 14 per cent against the euro since the 2016 EU referendum – inflation has declined to a two-year low, rising by just 1.8 per cent last month, compared with 2.1 per cent in December.

Inflation peaked at a five-year high of 3.1 per cent in November 2017. The fall comes as the latest data shows wages rising by 3.3 per cent. The fall is due mainly to cheaper gas, electricity and the price of petrol down by 2.1 per cent a litre between December and January because of falling crude oil prices.

With average wages now further outpacing inflation, this may help explain why last month proved markedly better than expected in the high street. Latest figures from the Scottish Retail Consortium and KPMG show retail sales grew year-on-year by 2.2 per cent in January.

This is the strongest rise recorded since last June, when there was an increase of 2.7 per cent, helped by warm weather. The largest increase was seen in food sales, up by 4.9 per cent, with the New Year and Burns night celebrations cited as key factors.

There was a more modest year-on-year increase in non-food sales, with a rise of 0.2 per cent, compared with a fall of 2.8 per cent in December. “Following a dreary December for retailers, January brought a glimmer of hope,” said Paul Martin from KPMG.

As for the UK overall, the ONS reports that retail sales also bounced back sharply in January, rising by one per cent on the previous month, after a 0.7 per cent decline in December.

Compared with a year ago, retail sales are running 4.2 per cent higher. The figures recorded the biggest annual increase since December 2016 and beat most analysts’ expectations.

Meanwhile, Scotland’s whisky exports continue to go from strength to strength. Analysis of HMRC data by the Scotch Whisky Association found exports grew 7.8 per cent by value to £4.7 billion last year. The number of bottles exported also reached record levels, growing by 3.6 per cent to 1.28 billion.

Also released last week were figures showing Scotland’s international exports excluding oil and gas rose by £1.9bn to £32.4bn in 2017, the highest annual growth rate (6.2 per cent) since 2011. The increase was driven by a rise in manufacturing exports, including food and drink, while exports of services also increased.

And updated GDP statistics, released on the same day, show that Scotland’s GDP grew by 0.2 per cent in the third quarter of 2018, and has increased in every quarter since the start of 2017.

This prompted a whoop of delight from Finance Secretary Derek Mackay (Scotland’s Brexit Secretary Mike “We’re all doomed” Russell perhaps having been temporarily gagged and tethered backstage that day).

“It’s great news,” declared Mackay, “that Scotland’s economy and international exports both continue to grow,” adding that the data followed on the heels of unemployment figures being the lowest on record at 3.6 per cent.

“Our manufacturing sector, including food and drink, is performing particularly well and it is encouraging to see increasing international interest in our service sector”.

Meanwhile, from that stricken wreck that is Royal Bank of Scotland, has come news of profits recovering to £1.62bn last year, more than double the £752 million previously recorded. Having cleaned up its balance sheet, and resolved its issue with US authorities, the bank paid its first dividend in a decade in 2018. The £1.6bn dividend announced last week dwarfs the £241m paid out last year and is enough to put RBS back among the UK’s top 15 payers. It comprises a final dividend of 3.5p per share, and also a 7.5p special dividend, which means the Treasury is set to receive £977m.

Finally, some encouraging news from the housing market. The number of homes repossessed in the UK fell to its lowest level since 1980 last year, according to industry figures. Low mortgage rates and a less aggressive attitude from lenders has meant low levels of repossession in recent years. Mortgage arrears among homeowners have also been falling.

And here in Scotland, average house prices have continued to rise – despite Brexit. According to the latest data from Registers of Scotland, the price of an average home in Scotland in December was £183,968, up by £9,000 or five per cent since January 2018. Sales volumes at 9,444 in December compare with 6,240 last January.

There is fear and foreboding a-plenty, and deep uncertainty to contend with – but signs of resilience, too, amid the gloom.