With unemployment already falling far faster than the Bank of England expected last summer, fresh data has shown that the number of people out of work in the UK dropped a further 125,000 to 2.34 million in the final three months of 2013.
That comes just 24 hours after it was revealed that inflation fell to 1.9 per cent in January, the first time it has undershot the Bank’s price index target in more than four years.
Taken together, the labour and inflation figures are good news for the better consumer sentiment that is fuelling Britain’s economic recovery.
It now looks pretty certain that, by the second half of 2014. Significantly more people will be in work than in the depths of the downturn; and for the first time in years their earnings will be rising above the rate of inflation.
That is good news for households – but probably bad timing for Ed Miliband and Labour’s claim in the run-up to the 2015 general election that, despite the economic recovery, living standards are being squeezed.
In further bad news for Labour, the white smoke from Bank of England governor Mark Carney seems to be that an interest rate rise to spoil the recovery party also looks increasingly unlikely this side of that election.
With any inflationary threat seemingly ebbing away, Labour would also find it uphill gardening to suggest that the Bank is doing the current coalition government any favours politically through its soft monetary stance.
With the exception of some worrying voices offstage about a nascent housing bubble, there is something approaching a low-key virtuous circle developing economically.
Iberdrola seeks some consolation overseas
MANY moan about the utilities industry in the UK, but most of the time ScottishPower-owning Spanish giant Iberdrola cannot speak highly enough of the energy landscape here.
And, despite occasional turbulence amid the turbines, such as Ed Miliband (see above) pledging to free energy prices for 20 months if Labour wins the next general election, Iberdrola is putting its money where its country isn’t.
The group yesterday revealed that the UK will get the major share of its €9.6 billion investment programme between this year and 2016.
Over 40 per cent of that global investment will go to the UK, Latin America will get about 23 per cent, but storm-hit Spain gets only 15 per cent.
That is hardly surprising when the regulation-heavy Spain, still also suffering from major economic problems, towering unemployment and debt, imposes swingeing levies on its main utility company.
The move abroad has been constant for Iberdrola in recent years and there is little in the macro-economic backdrop to lead that strategy to change.
Iberdrola, and through it ScottishPower in the UK, seeks steady, regulated earnings without being coshed by political interference.
The energy industry in this country is not without its own problems and political interference, but it is nowhere near as intrusive as what companies like Iberdrola faces at home.
That may be bad news for the likes of Spain in the short term, but very good news for Britain. We are reaping the benefits of other countries’ heavy-handedness in the energy sector and should be wary of replicating it ourselves.