Yesterday was a golden day for the Despite Brexiteers – those who try to frame every piece of good economic news as if it is somehow a great surprise and shouldn’t really have happened. BMW announced that it is to build the electric version of the Mini in Britain, Amazon announced it was doubling the size of its research team in Britain, while according to the CBI, output from factories is growing at its fastest rate in 20 years.
Today, though, comes news which is firmly on the other side of the fence: the ONS’s first estimate for economic growth has come in at 0.3 per cent. This is a little higher than the 0.2 per cent it measured in the first quarter, and a comfortable distance from the recession which many predicted in the wake of a Brexit vote, but a disappointment nevertheless.
The release to some extent contradicts yesterday’s news: output from factories over the past quarter seemed to grow at its fastest rate in 20 years (so says the CBI) while simultaneously manufacturing seems to be shrinking (according to the ONS). I thought factories were where you manufactured stuff, but maybe there is also a large but shrinking industry of people stitching and bolting things together on their kitchen tables which explains why manufacturing can shrink while factory output grows. Or maybe it is just like the opinion polls – we put far too much faith in what the statisticians are telling us.
Either way, the economic news over the past couple of days can be treated as a score draw between Remainers and Leavers. The economy has not collapsed as many said it would, but still we are trapped in the cycle of low growth in which most of the world has been stuck since the crisis of 2008 and 2009.
What really matters though is what happens next. Brexit is really just a blank canvas onto which many different futures can be projected. It could enable the construction of an offshore tax haven on the edge of Europe – or it could facilitate the development of a Corbynesque, Venezuelan-style socialist republic. It is really down to us to choose.
Brexit will be a success if we can use it to attract investment and stimulate trade; if we can’t, it won’t. A hugely-positive development is that trade talks began this week between Britain and the US. Less promising is Michael Gove’s kneejerk decision to dismiss the case for relaxing an EU ban on chicken which has been washed in chlorine – a product which has been cleared by the EU Food Safety Authority and the ban on which the poultry industry has all but admitted is a protectionist device in disguise. If the government is going to nod to every vested interest we are not going to get far in trade talks with the US.
We don’t need to be worried about low-growth for now so long as we are investing and attracting investment. For too long the economy has been carried along by consumer borrowing. The much-vaunted realignment of the economy which was supposed to follow the 2008/09 crisis – from consumption to exports — never happened. With the pound at a more competitive rate and with the option of opening up trade with the rest of the world we have a good opportunity to make it happen now. The opportunity must not be wasted.
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