Latest GDP figures
I have always believed that both excessive pessimism and negativity on the one hand, and panglossian over-optimism on the other, are equal and opposite mistakes which should both be avoided.
This particularly applies to the economy - and I write this as someone who has spent much of my career producing forecasts and them checking what I and others had forecast by comparing them to actual outcomes. I used to joke to my cousin who was senior forecaster at the Met Office, that as an economic forecaster my profession gave his someone to look down on.
Pretending that everything is lovely when all economies in the world are going through a difficult patch and living standards for nearly everyone have been hurt by the cost of living crisis would clearly be foolish.
Equally, there is such a thing as talking the economy down, making out the economic problems are even worse than they actually are, and if this makes people less willing to invest in businesses or those businesses so risk averse that they are discouraged from taking imaginative and positive new ventures, this can make the problem far worse.
A very cautious welcome, therefore, should be given to economic statistics which demonstrate that the British economy appears, up to the end of 2022, to have so far avoided the recession which has been constantly predicted by a good many economic forecasters and a large chunk of the media. Of course, those figures could yet be revised up or down (both have happened) but even preliminary reported figures generally tend to be much closer to the actual real-world outcome as best we can measure it than the vast majority of forecasts.
For the same reason the IMF's depressing forecasts of growth (or the lack of it) for the British economy in 2023 should best be seen as a warning of a possible bad outcome to be avoided rather than a sure and certain indication of our inevitable fate.
Indeed, since the IMF managed simultaneously to predict the gloomiest of outcomes for the UK economy and welcome the measures the present UK PM, chancellor and government are taking to manage the economy, one has to ask what on earth they would have forecast had they thought the government was following the wrong policies?
(By the way, I will challenge anyone reading this to let me know if you find a single other politician or political activist who is willing to quote both aspects of the IMF projections referred to in the paragraph above - I bet most will quote the forecast but not the comment on policy, or vice versa, depending on which suits their political convenience.)
Today's latest GDP figures also show Britain had the fastest growing economy in the G7 over 2022. And the PM's plan to halve inflation will help us grow the economy in 2023.
- The latest GDP figures show short-term challenges should not obscure our long-term prospects – the UK outperformed many forecasts last year.
- The fact the UK was the fastest growing economy in the G7 last year, as well as avoiding a recession, shows our economy is more resilient than many feared. We are not out the woods yet as inflation, exacerbated by Putin’s illegal war, is slowing growth across the world, with the IMF predicting a third of the world economy will be in recession this year.
- But I believe that if we stick to our plan to halve inflation this year - and whatever anyone tells you, this is not inevitable but it can be achieved - we can be confident of having amongst the best prospects for growth of anywhere in Europe, while protecting the most vulnerable as we manage global economic pressures.