Output refuses to perish
BY NOW, one might have thought, the Brexit smog would be so thick that UK plc would be choking. The extraordinary thing is that, in spite of the dire warnings from business organisations and car firms about the impact of leaving the European Union on growth, jobs and prosperity, the economy refuses to roll over and die.
The Office for Budget Responsibility will doubtless, like the Paris-based advanced countries club the OECD, downgrade growth for Britain in today’s Spring Statement.
But remarkably the numbers from the real economy continue to confound forecasters. Far from being dead on its feet, in January the economy rebounded by 0.5pc, way above the consensus of analysts, and casting doubt over the accuracy of the closely watched purchasing managers’ indexes.
Industrial production jumped 0.8pc against expectations, given the trauma of the car industry.
Contrast this with Germany where industrial output tumbled by 0.8pc, casting a pall over the eurozone, where European Central Bank president Mario Draghi is resorting to special measures. All three sectors of the UK economy – manufacturing, construction and services – were up strongly.
The January data sent private sector economists reaching for their slide rules, raising forecasts for the first quarter from 0.2pc to 0.3pc. So what is driving recovery in the very unsettled political environment?
One theory is that it is stock-building ahead of March 29. But there is an alternative explanation: all the Westminster shenanigans and obtuse legal arguments have been going on for so long that consumers are ignoring them.
What we do know is that with earnings now comfortably outstripping inflation, many households (if not those at the bottom of the pile) are feeling relatively welloff, and spending. The cash may not be showing up at Debenhams and Superdry but the sharp rise in distribution services suggests that online deliveries, be they from Amazon, Next or Just Eat, are robust.
Clearly, that is the way that Marks and Spencer sees things, given its pricey new joint venture with Ocado.
Improving incomes, higher tax receipts from frozen thresholds and strong VAT revenues are also delivering a fiscal bonus.
The Brexit stalemate may have stalled Chancellor Philip Hammond’s public spending review. We would have expected nothing else from Spreadsheet Phil.
But we should deplore the tendency to embrace every dire forecast when official data, based on real events, is sending such a different message.
Tech tormentors
THERE has been global cowardice when it comes to curtailing the bullying and anticompetitive antics of the digital giants.
The concern is that if governments or activists push back too hard the firms will pick up their marbles and do a runner.
That is precisely what Amazon did in New York when local protesters objected to a new campus. So it was brave of the UK Treasury to produce an excoriating report focusing on the anti-competitive behaviour of these behemoths. The most damaging finding is that their dominance online has stifled innovation.
And, as newspapers have learnt to their cost, Facebook and Google are destroying competition for digital advertising.
The study, headed by Professor Jason Furman, concludes that the UK needs a new competition unit with expertise in technology. It also wants the Competition & Markets Authority to launch an immediate probe into digital advertising. That may require more resources but is worth doing.
Brussels has backed away from an EUwide digital turnover tax after opposition from Ireland, Sweden and Denmark.
The Chancellor wants to go it alone in 2020 and we trust that we may hear a little more of that today.
Emma’s dilemma
WHEN it comes to the gender pay gap it is always possible to dream up reasons why a woman doing the same job as her male counterpart is paid less.
GlaxoSmithKline chief executive Emma Walmsley may be the highest-paid woman in the FTSE 100 but her £5.9m last year is half that of Pascal Soriot, her equivalent at Astrazeneca. It can be argued Soriot has delivered a great pipeline of new medicines while GSK has stalled. Excuses, excuses.