The data shows UK is no ‘sick man of Europe’

Just over a week ago those doomsters at the Bank of England declared that the economy was in recession. Always alert to a negative headline to exploit, much of the economic establishment and the pathologically pessimistic broadcast media pounced on the news, played up the air of crisis and, predictably enough, the pound fell.

But, as we discovered yesterday, the country is not in recession at all. the Office For National statistics, the official source of UK economic data, revealed that, far from falling in the three months to June, output actually climbed by 0.2 per cent.

this in spite of spiralling energy prices, rampant inflation and efforts by the Labour Party and other Cassandras to paint the UK as an economic basket case.

As interest rates rise and goodvalue mortgage deals of the kind house-buyers have enjoyed for more than a decade start to vanish, it is entirely possible there will be a downturn. But it is not happening yet.

Indeed, the latest data from Nationwide, one of Britain’s biggest suppliers of home loans, shows that house prices were still climbing at 9.5 per cent on an annual basis this month. this may only be down 0.5 per cent on August, but still represents a fairly handsome clip.

Given that housing is a hugely important driver of consumer demand it suggests that if the UK does fall into recession in the current period it will be a shallower downturn than expected. Yes, the recent rise in interest rates, particularly on longer- dated UK government bonds, does mean the era of cheap money is coming to an end.

that is among the reasons why Chancellor Kwasi Kwarteng slashed stamp duty across the board on house purchases in his much-derided mini-Budget, with first-time buyers being the most privileged beneficiaries.

And so now is not a time to view the economy through rose-tinted glasses. While the latest ONs figures reveal that the economy is still growing, they also show that economic output has still not recovered to the level it was at before the Covid-19 pandemic. But they do suggest that trussonomics had little to fear from the upcoming forecast from the Office For Budget Responsibility. Indeed, the highly- respected National Institute of Economic and social Research, not normally known as a friend of the tories, forecasts that the proposed tax cuts, if enacted, will boost growth by as much as 2 per cent in 2023-24.

THERE is good news too regarding rising prices. the Government is regularly skewered by its critics for having a higher inflation rate than most of its competitors. But here again Britain is bucking the trend.

New figures from the eurozone show consumer prices there have jumped 10 per cent in the last year, a new high, and a fraction higher than the UK’S inflation rate of 9.9 per cent.

What’s more, it is widely believed that UK inflation is at or near its peak, with Liz truss’s multibillion aid package for households and businesses likely to knock as much as 5 per cent off the headline rate.

the words ‘financial crisis’ continue to be flashed across TV screens following the tumble in the pound since the mini-Budget but, thanks to the Bank of England’s decision to buy up £65billion of government bonds, sterling has come roaring back and is now trading above the level it was at before Kwarteng stunned the markets with the bold set of initiatives he unveiled last week.

With Germany already in recession, EU inflation in double figures and the euro sinking, anyone seeking to brand the UK the ‘sick man of Europe’ might check the data before rushing to conclusions.

Now that Liz truss has belatedly made peace with the Office For Budget Responsibility (even if we must wait almost two months for its verdict) it is only right for her critics to at least reserve judgment over the Government’s radical new approach, if not give it their enthusiastic backing.