It’s delicious to see the naysayers face reality
THE extraordinary resilience of the British economy since the Brexit vote in June 2016 has been evident for some time. Predictably, though, few Remain supporters and economists have admitted that the scare stories put about as part of Project Fear – such as a big downturn in output, the necessity of an emergency Budget and years (or decades) of hardship – were wildly inaccurate.
So we must heartily applaud the honesty of Lord O’Neill, a very vocal pro-EU businessman who was a Treasury minister under Project Fear’s architect George Osborne.
In a bold mea culpa, the former chief economist at investment bank Goldman Sachs says Britain’s economy will reap the benefits of a robust global expansion and this will ‘easily dwarf’ any damage caused by our departure from the EU.
Lord O’Neill knows what he is talking about when it comes to the international economy.
He made his name 17 years ago by coining the acronym BRIC for the fast- developing countries Brazil, Russia, India and China, which he predicted would overtake the six strongest western nations in terms of economic might.
In the main, the BRIC nations are booming and, with other newly rich countries, account for 57 per cent of world output.
What the Brexit doom-mongers irresponsibly failed to anticipate was that the US economy would enjoy a spurt of growth and that there would be stirrings of recovery in the EU – both, in turn, helping Britain.
Experts say there has been a ‘synchronised recovery’, when the world’s major economic blocs expand at the same time.
What is often forgotten is that the US is Britain’s biggest trading partner – a market in which we have a trade surplus of almost £40billion a year.
Labour politicians such as London mayor Sadiq Khan may deplore Donald Trump, but they foolishly ignore how his big tax cuts for businesses will boost the US economy.
Yesterday, the International Monetary Fund said the cuts would turbo-charge american and global growth for years, adding up to 1.2 per cent a year to US output.
This will raise global expansion to 3.9 per cent this year and next year – the strongest forecast since 2008.
The IMF said US growth would rise from a previously predicted 2.3 per cent for 2018 to 2.7pc, and raised its forecast for 2019 from 1.9 per cent to 2.5 per cent. Here, a more competitive exchange rate (following the sterling devaluation in the aftermath of the Leave vote, which made UK goods and services cheaper overseas), and the global strength of our services sector has helped Britain thrive.
How delicious it is for Brexiteers to see these doom-mongers forced to recognise a reality they tried to trash.
Prime among these was Christine Lagarde, the French head of the IMF, who shamefully signed up to Project Fear and warned that if Britain voted for Brexit, it would be ‘pretty bad, to very, very bad’ for the UK.
Embarrassingly for Madame Lagarde, the IMF now suggests Britain’s economy will grow by 1.5 per cent this year – faster than Japan’s or Italy’s.
Even though Lord O’Neill still thinks the Leave vote was a ‘ weird thing for the UK to impose upon itself’, he now concedes our economy was more robust than he had thought. The jobs market has improved, with an unemployment rate of 4.3 per cent of the workforce being the lowest for 42 years. Companies do not take on more workers unless they see strong economic prospects.
Productivity – the measure of workers’ output – also jumped in December by its highest level for six years.
In general, British businesses are in a confident mood.
Carolyn Fairbairn, the strongly pro-EU boss of the employers’ organisation the CBI, may be in despair about the Government’s Brexit policy, but a recent survey of her members in the manufacturing sector found that orders for goods were at the highest level for three decades and exports orders at their best for two decades.
To his credit, Lord O’Neill (once minister for the Northern Powerhouse – Osborne’s vision of an economic region to rival London and the South East) says parts of the UK, particularly the North West, are ‘doing better than people realise’.
HIS is the rare voice of a Remainer who repents, admitting that the economy has bounced back from the financial crash of 2008 and is expanding despite the squeeze on household income caused by higher import prices.
For too long, Britons have been forced to endure a litany of gloom from anti-Brexiteers. But the facts must be allowed to speak for themselves: Output and exports up, more jobs, and international experts predicting above-average growth.
There is still a long way to go until Brexit works itself out, but voters deserve honesty rather than the persistent dishonesty and apocalyptic warnings of the agents of Project Fear.