December saw the Financial Times survey economists about UK market conditions. The majority said the nation lagged behind other developed countries. After all, bar the UK, the euro zone soared at the end of 2017 – predicted to top US growth levels – with the global economy forecast to reach a seven-year high.
“A few economists said the UK would become or continue as the ‘sick man’ of Europe,” Gavin Jackson and Gemma Tetlow explained of the survey results. “But those who used the term tended to be more pessimistic than the consensus, mostly about Brexit.”
More intriguing, Tetlow and Jackson suggested, was that some “thought this outlook was too gloomy and expected that the fall in the pound would lead to stronger export growth in 2018.”
A look through recent economic statistics reveal such optimism isn’t uncalled for. The year-long recession promised to us by former chancellor George Osborne never came to fruition. And the same euro zone growth that the UK wasn’t part of led to the manufacturing sector’s best three months to December since 2014.
The Resolution Foundation has warned, however, that the squeeze on households is set to continue. “The anaemic growth of wages coupled with the spike in inflation has resulted in pay rising more slowly than prices once again,” it said.
“Inflation is expected to abate in 2018 though, meaning this new pay squeeze should be comparatively brief. The outlook for the lowest earners is far brighter. The NLW’s introduction tipped the pay floor for those aged 25 and over in advance of average wage growth. This has led to the largest fall in low pay in four decades.”
The economic statistics employers should be more concerned with, the Financial Times survey reports, revolves around the low unemployment rate. Couple it with the UK’s biggest drop of EU citizens in three years, and bosses find themselves with no choice but to cough up “better pay deals”.
The FTSE 100 also reached record highs during December, heralding good news for the UK according to economist Simon Ward. In an interview with the Telegraph, he opined that the stock market’s performance will prevent “the nation’s fears of a slowdown”.
He revealed to writer Tim Wallace: “Other reasons for modest optimism going into 2018 include: recent order numbers suggesting a recovery in construction output and an expected Brexit transition agreement, which may encourage companies to proceed with delayed investment plans.”
Perhaps these reasons are behind the findings of an Institute of Directors report, claiming that 47 per cent of employers view 2018 with much optimism. In fact, only 17 per cent thought the next 12 months would prove fatal to business.
“We have seen progress in recent weeks in the Brexit talks, and overall the economy has beaten the more negative predictions for 2017,” said Stephen Martin, director general of the Institute of Directors.
So while 2018 will still come with its own set of challenges, Martin believes December’s economic statistics give weight to the argument “that British firms are defying gloomy claims about the country’s prospects as the departure from the EU approaches”.[rb_inline_related]
Share this story