This week should see a flow of pretty good economic news for the Chancellor and for the Government. Today, the November Consumer Price Index, which measures inflation, dropped from 2.1 per cent and is now just 0.1 per cent off the Bank of England’s inflation target, which hasn’t been met for four years. That happen soon.
Tomorrow, Wednesday, labour market data for November are likely to show a continued fall in unemployment, and that the number of people in employment topped 30m for the first time ever. Then on Friday, the final figures for GDP in the third quarter will probably be revised up from 0.8 per cent to 0.9 per cent, following recent revisions to construction output.
That doesn’t seem like much to dance about, but it says the UK economy was expanding at an annual rate of 3.6 per cent. We haven’t seen anything like that since the immediate bounce back after the 2009 recession, or the credit-fueled boom before the financial crisis. Moreover, current estimates are that the economy ended 2014 growing by about 0.7-0.8 per cent, or roughly 3 per cent at an annual rate. This rate of recovery is stronger than in any other country in the EU, and most likely faster than in the US. Next year, the UK is expected to grow by close to 2.5 per cent: that’s the top decile among industrial countries.
These economic indicators will play well to the Government’s existing polling advantages when it comes to economic performance and competence. True believers will say this “proves” that Plan A for Austerity was right all along. The rest of us can take a rather more objective and circumspect view. We shouldn’t be churlish about good economic news but it is important to keep things in perspective and not crow too loudly.
The fall in inflation has been a long time coming to the UK for various reasons including the crisis-related slump in the value of the pound, but it isn’t peculiar to this country. In the US and the Euro Area, inflation has been falling t…