We were about to crash out of the EU without a deal. The political system was in deadlock. Businesses were fleeing the country and investment was drying up, all against a backdrop of global trade wars and slumping demand across the eurozone. And what happened to the British economy against all those headwinds? As we learned this morning, it sailed right through the storm with steady, if hardly spectacular, growth. It now looks certain that far from reducing us all to poverty, leaving the EU won’t even create a brief technical recession. The predictions of catastrophe could hardly have been more wrong. If you had to choose a day to officially declare Project Fear dead, this would be it.
The more swivel-eyed Remainers looking for an economic catastrophe to persuade us all of the foolishness of Brexit must have pinned their hopes on this morning’s GDP report. The economy contracted in the second quarter of 2019, so if it was down again this time that would make two consecutive quarters of declining output – the textbook definition of a recession. After all, there were plenty of problems. The Johnson government had turned the no-deal rhetoric to eleven which must have worried some businesses along with foreign investors. Deadlines for leaving the EU came and went. And the global economy entered what looked like a sharp slowdown. It was always going to be a tough slog to grow through all of that.
And yet today’s figures show a 0.3 per cent expansion. That is not a great figure, and it was slightly below the 0.4 per cent the City consensus forecast, but it was still perfectly respectable. It’s as good as most comparable economies, and significantly better than Germany which is almost certainly going to find itself in a recession when it releases its figures on Thursday. In fact, despite all the gloom the economy is surprisingly robust. A mix of rising entrepreneurship, record employment and robust spending, helped by real wages that are starting to accelerate, have kept the expansion going. It will almost certainly get better in 2020.
One way or another, it looks as if the general election will resolve our tortured departure from the EU, and the most likely outcome – leaving with the current deal – will reassure companies nothing much will change. Whoever wins, there is going to be a huge rise in government spending, which will lift demand. A modest revival in the eurozone, a steadying in China, and a pre-election splurge in the United States may well lift global demand helping our exporters. Of course a Corbyn government may crash the economy. But that aside, the expansion looks set to continue and may well turn into one of the longest in history.
The referendum result, we were told, would crash the economy. When that didn’t happen, actually leaving would. Today’s figures show that this isn’t going to happen either. It isn’t even going to create a modest slowdown. The reality is that UK membership of the EU never made much difference to the economy one way or another. We may have two or three more months of warnings of catastrophe to come. But from today that can finally be dismissed as laughable fear-mongering – and Project Fear is surely finally over.