Macroeconomic review: where Britain stands

Who could blame the average commentator for looking on the past year negatively? At first sight, Britain’s economic experiences over the past twelve months seemingly warrant the title ‘Year of Discontent’.

During this time, Britain was estimated to have suffered two quarters of negative growth; Moody’s and S&P alike deprived Britain of her AAA rating; growth estimates were lowered, and a triple-dip recession was forecast. In a time of uncertainty, the notable consistency was inflation, an increase in the price level that remained above the 2.0 percent target.

The economic scene was so bleak that Chancellor George Osborne found himself comparing Britain to the Southern European countries, simply to adopt a positive outlook.It was all well to emphasise that Britain, unlike France, maintained the highest possible credit rating, until Fitch alone upheld this judgement – much to the amusement of the French commentators.

Osborne even found a new scapegoat in the form of snowy weather. Admittedly, the winter weather made a slightly lesser antagonist than Miliband and Balls, who send a chill through the House of Commons on a weekly basis.

The message to take away, however, is that the signals were misleading, the statistics false, the negativity unfounded. Britain did not experience a double-dip recession, and GDP has been rising impressively since.

Most recent reports show growth of 0.7 percent in the second quarter of 2013, with employment increasing by 0.2 percent. This progress is in spite of despondent reports that expect a curbed work ethic and decreased international investment. The Olympics saw Osborne booed and former Prime Minister and architect of current British debt levels, Gordon Brown, cheered. Perhaps the inverse would have been more fitting.

The Labour Party, on the other hand, stress that many families are still worse off than before the 2008 Financial Crisis. They are quite correct. The increase in the regressive VAT to 20 percent continues to place those on the lowest incomes at a disadvantage.

Are they, however, missing the point? In light of the annual raising of the tax-free threshold, the government is relieving the poorest workers and promoting work simultaneously.

Of course, the British cannot take complete credit for their progress. Germany grew at its highest rate for two thirds of a year whilst France, albeit less impressively, expanded too. As eurosceptics regularly need reminding, these nations are major trading-partners. As such, they determine the fate of our economy in conjunction with any governmental macroeconomic instrument.

Step back and observe a worldwide recovery. China, whose dwindling increase in growth had attracted much attention, is now boasting higher manufacturing activity. HSBC raised its Purchasing Managers’ Index of the sector’s health to 51.2 from 50.1. God forbid that the Chinese may slip back a notch and grow only 7.5 percent rather than 7.7 percent!

So, assuming that the latest round of statistics are correct, their reliability having previously rivalled that of our Deputy Prime Minister, Britain’s future doesn’t look too bleak and the golden tinge of the Noughties may soon be in sight again.