Latest GDP shows UK unsteady on its pins but not crippled

Comment Martin Flanagan

Bank of England governor Mark Carney says the UK can “consciously recouple” with a faster-growing global economy this year as greater clarity emerges about the country’s ongoing relationship with Europe. Let’s hope the governor’s channelling of Gwyneth Paltrow’s famous “conscious uncoupling” to describe her split with Coldplay singer Chris Martin doesn’t lead Carney to become lachrymose and feeling-the-love at the next presentation of the Bank of England inflation report.

But the better than expected UK GDP figures out yesterday for the final quarter of 2017 do give more credence to the idea that Brexit has damaged the economy, not devastated it. The economy expanded 0.5 per cent quarter on quarter on the home stretch in 2017 – the best since the even more unexpectedly strong Q4 of 2016.

Carney has not gone rose-tinted. He still thinks Brexit uncertainty has cost the UK tens of billions of pounds in lower economic activity, probably equating to about 2 per cent of lost GDP growth that had been expected before the Brexit vote.

But he clearly reckons there is something for the UK to play for economically in terms of the overall outlook as the EU talks proceed, and the temporary “Brexit effect” fades from black to perhaps a bluish-grey.

The latest GDP figures bear the governor out. That last quarter rise leads to annual growth of 1.8 per cent for the whole of 2017.

While not great by an means, that is considerably better than the worst fears of Remainers in the EU referendum. Particularly given the sharp squeeze on consumer purchasing power that has accompanied the Brexit uncertainty.

Any talk of UK economic apocalypse, rather than us just being damaged goods for an uncertain length of time, is now clearly misplaced.