This is how the story goes: May came back from holiday resolved to hold a snap election, after explicitly stating she would not call for one. It was a reluctant decision, May said, but worries of opposition parties hampering Brexit negotiations made her take the plunge. As the April 2017 economic statistics show though, a lot was happening in the background.
At the time, she portrayed Westminster as divided, posing a risk to the nation’s ability to make a “success of Brexit”. It has since been suggested the need for stability wasn’t the only reason for her change of mind. Fortune senior editor Geoffrey Smith, for example, claimed May needed a personal mandate to “bolster her authority”.
Tim Wallace from The Telegraph stressed it was to further push ahead with her agenda – and claimed businesses were unphased by the matter. After all, “this is Britain’s fourth big vote in as many years,” he said. Wallace also reminded that doom and gloom prophecies regarding the referendum largely never came true – while the Treasury anticipated a drop in GDP, the instead faced a period of growth.
May even brought the UK’s resilience to light during her announcement of the snap election: “Despite predictions of immediate financial and economic danger, we have seen consumer confidence remain high, record numbers of jobs, and economic growth that has exceeded all expectations.”
But as the April 2017 economic statistics roundup seeks to flesh out her statement, it found that the economy hasn’t actually fared all that well. For starters, while the amount of Brits out of work may have fallen to its lowest since 1975, employment only rose by 0.1 per cent – with numerous EU workers dropping out of the British workforce.
At the same time, as was explained by Richard Murphy, professor of practice in international political economy at the University of London: “Pay in February was 1.9 per cent higher than a year earlier, but is running below the 2.3 per cent increase in prices. That means real living standards are falling.”
Murphy further concluded in the April 2017 economic statistics roundup that, “as the government is loathe to admit, the UK still has a huge budget deficit. It’s hard to recall that the Conservative Party plan in 2010 was to fight an election in 2015 with no deficit. The 2017 election will be fought against the backdrop of the deficit for 2016-17 exceeding £50bn and actually expected to rise next year, with no prospect of this ceasing.”
Beyond that, the UK’s high street may need to be saved, as it experienced the biggest drop in quarterly sales since 2010. And as to May’s point on record growth, GDP dropped by 0.3 per cent due to the rise in living costs. But despite the findings of the April 2017 economic statistics, we should still take the numbers with a pinch of salt.
“The first quarter’s slowdown was led by consumers, whose incomes are under pressure from slowing employment and wage growth as well as rising inflation,” said Samuel Tombs,Pantheon Macroeconomics’ chief economist. “One quarter of slow growth is not definitive proof that the economy is on the ropes, even if the pressure on consumers’ incomes looks set to build as retailers pass on higher import prices.”
Similarly, the chief economist at Deloitte, Ian Stewart, claimed Brits needed to be wary of over-interpreting the numbers. He said: “Quarterly GDP growth is choppy and prone to revision. Inflation will continue to squeeze the consumer but the outlook for manufacturing and exports has brightened. Growth is slowing, but this looks like a cooling, not collapse, in UK activity.”
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