What happens when you put 10 economists in a room? You get 11 different opinions.
It’s an old joke, but the punchline only works because it’s true. Economic forecasting is a dark art, not least because it is based on the analysis of a myriad of different factors which can change in the blink of an eye and there is always a whiff of subjectivity.
That’s why in the last 12 months, we have been variously told by the experts that Britain’s departure from the EU will transform the country into a land of milk and honey or catapult us headfirst into economic suicide. In between there has been every shade of grey.
Finger in the wind conjecture aside, there are some unavoidable facts. Yes, at the height of Brexit chaos when Theresa May was losing ministers by the minute the pound did tumble. To be more precise it plummeted.
One of the lowest points came as Brexit secretary Dominic Raab handed in his resignation in an attempt to distance himself from the ensuing shambles. The same happened in the wake of the referendum vote, when the pound fell to its lowest level since 1985.
Cue headlines signalling impending doom. However, good news is never afforded the same column inches, so there was no one shouting from the rooftops when in both cases sterling quickly stabilised.
There are so many unknowns about Britain’s post-Brexit future it is easy to fall prey to the scaremongers, but what we need more than ever is rational logic. We need to look at the bigger picture and see the recent fluctuations of the pound within the wider rise and falls of the UK’s economy.
Every decade presents new economic challenges. The 1970s had an oil crisis, a stock market crash and the Winter of Discontent; the 1980s was a decade of record unemployment, and the 1990s began with Black Wednesday and another global recession.
In the last 10 years there have been similar peaks and troughs and yet, Britain has weathered the storm and remains economically robust. Let’s not forget that we are still the world’s fifth-largest national economy in terms of GDP and the ninth largest when measured by purchasing power parity.
There’s more. In 2016, the UK was the 10thlargest goods exporter in the world, the fifth largest importer of goods and our tourism sector is thriving. For the last eight years, it has out-strip traditional sectors like manufacturing, retail and constructionand by 2025, it is estimated that will be worth £257 billion to our economy.
And crucially the benefits are not just being felt in London. According to figures released in November, tourism is worth £691 million to the South Warwickshire economy, with Shakespeare Country last year attracting 10 million visitors, a figure buoyed by a seven per cent rise in day trippers.
In Yorkshire, the news is even better. A report published in March showed tourism was worth £8bn to God’s own county, which represented a 14 per cent rise since the statistics were last compiled in 2011.
It’s the same story in Wales, where tourists – some of them lured by that same weak pound – spend £17 million a day, the equivalent of £63 billion a year. Those figures are not plucked out of thin air, they are hard and fast facts which are worth remembering as we stare into our post-Brexit future.
Admittedly, the final months of 2018 have been riddled with uncertainty, a feeling compounded by the postponing of parliament’s final vote on the PM’s unpopular withdrawal agreement until the New Year.
As MPs cleared their desks for the Christmas break, the odds of us leaving on the basis of a no-deal rose, prompting another slew of worst-case scenarios and predictions the country would be bankrupt by Easter. However, the world – and the UK’s economy – kept on turning and it will continue to do so, whatever the end result of Brexit is.
There’s another old joke about what would happen if you laid all the world’s economists end to end. The punchline? You’d never reach a conclusion.
We can agonise about what may or may not happen in the coming weeks and months, but our greatest enemy is stubbornness. We must keep moving forward and we must remember that history tells us that like every Western economy, Britain has highs and it has lows.
However, crucially after every downturn, from the Great Depression of the 1930s to the austerity which followed both World Wars, it has risen back up phoenix-like and when it does it is always the agile, outward-looking outfits which rise to the top.
Negativity might be a staple of the tabloid press, but to successfully ride those economic waves we need creativity, we need positivity and we need people who will lead from the front. So let’s invest in the ambitious , let’s support the talented and let’s tell everyone that despite the odd currency fluctuation we are, as always, open for business.
The ups and downs of the UK economy…. (this key relates to the graph)
2. 1956: The Suez Crisis threatens to cut off Europe’s supply of oil and sparks a run on sterling.
3. 1960: With Harold Wilson’s ‘“most of our people have never had it so good” speech still echoing, Britons witnessrising living standards and increased disposable income.
4. 1973: In the first quarter, GDP reaches an all-time high, but by the December an oil crisis, stagflationand industrial decline triggers an economic downturn.
5. 1978-79: The Winter of Discontent sees widespread strikes by public sector unions and the introduction of the Three Day Week.
6. 1981:Declining output, rising unemployment and a fall in the inflation rate causes an economic downturn, which particular hits manufacturing.
7. 1986: Britain enters the first stages of an economic boom, which sees unemployment fall below 3 million.
8. 1991: High-interest rates, falling house prices and an overvalued exchange rate triggers a recession.
9. 1994: Economic recovery begins. Unemployment falls and stands at 1.7 million just two years later.
10. 2008: Rising global commodity prices and the subprime mortgage crisisupends the British banking sector and the credit crunch bites.
11. 2013: Britain’s economy grows by 0.8% in the third quarter – the fastest pace in three years.
12. 2018: UK wages rise faster than expected as Britain enjoys the lowest levels of unemployment since the mid-1970s.