Tuesday, March 20, 2018

The real story of our economy.

So many try to talk down the UK economy, that I’m using my column to redress the balance. Personally, I believe the UK is in a far better place than the Jeremiah’s so often portray. Wrote this for Oswestry and Borders Chronicle this week.

“The UK economy has grown every year since 2010. It now has a manufacturing sector enjoying its longest unbroken run of growth for 50 years. It has added 3 million jobs since 2010 and seen every single region of the UK with higher employment and lower unemployment than in 2010. It has seen the wages of the lowest-paid rise by almost 7% above inflation since April 2015. It has seen income inequality lower than at any time under the last Labour Government.

Britain faces the future with unique strengths. The English language is the global language of business. The British legal system is the jurisdiction of choice for commerce. London is the world’s most global city and capital of international finance and professional services. British companies are in the vanguard of the technological revolution, while our world-class universities are delivering the breakthrough discoveries and inventions that are powering it. British culture and talent reaches huge audiences across the globe; and our tech sector is attracting skills and capital from the four corners of world. 

The Office for Budget Responsibility forecasts more jobs, rising real wages, declining inflation, a falling deficit and a shrinking debt. The economy grew by 1.7% in 2017, compared with the 1.5% forecast at the Budget, and the OBR has revised up its forecast for 2018 from 1.4% to 1.5%. Forecast growth is then unchanged at 1.3% in 2019 and 2020, before picking up to 1.4% in 2021 and 1.5% in 2022.

Our remarkable jobs story is set to continue, with the OBR forecasting more jobs in every year of this Parliament and over 500,000 more people enjoying the security of a regular pay packet. The OBR expects inflation to fall back to the 2% target over the next 12 months, meaning real wage growth is expected to be positive from first quarter of 2018-19 and to increase steadily thereafter. Annual inflation statistics fell 0.3% to 2.7% yesterday. There are more falls to come. 

Borrowing is now forecast to be £45.2 billion this year. That is £4.7 billion lower than forecast in November and £108 billion lower than in 2010.

Debt is being reduced not for some ideological reason, but to secure an economy strong enough to cope with future setbacks. Taxpayer’s money is needed to support our public services and defence, not to be wasted on debt interest. So not all will be used to reduce debt. Since the autumn 2016, £60 billion has been earmarked for new spending, shared between long-term investment in Britain’s future and support for public services. Almost £9 billion extra has been invested in our NHS and our social care system. There is £4 billion going into the NHS in 2018-19 alone.

Taxes have been cut for 31 million working people by raising the personal allowance. 4 million people have been taken out of tax altogether since 2010. Fuel duty has been frozen for an eighth successive year, taking the saving for a typical car driver to £850 when compared with Labour’s plans. The national living wage has been raised to £7.83 from next month, giving the lowest paid in our society a well-deserved pay rise of more than £2,000 for a full-time worker since 2015.

So to the doom mongerers I proffer the old saying “Put that in your pipe and smoke it.”

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