Economy  

‘Beast from the east’ lingers on for UK economy

As Mr Davies points out, despite the economic issues documented, the UK employment market looks healthy. The Office for National Statistics (ONS) found that in the first quarter of 2018, 32.3m people were in work, a rise of 0.4 per cent from the previous quarter and a 2.9 per cent increase from last year (see Table 1). Perhaps more tellingly, the UK employment rate of 75.6 per cent is the highest since records began in 1971.

Table 1: UK labour market statistics for January to March 2018, seasonally adjusted

 

Number (thousands)

Change onOct-Dec 2017

Change onJan-Mar 2017

Headlinerate (%)

Change onOct-Dec 2017

Change onJan-Mar 2017

Employed

32,344

197

396

Aged 16 to 64 

31,148

185

401

75.6

0.4

0.8

Aged 65 and over

1,196

13

-5

Unemployed

1,425

-46

-116

4.2

-0.2

-0.4

Aged 16 to 64 

1,402

-46

-125

Aged 65 and over

22

1

9

Inactive

19,199

-76

29

Aged 16 to 64 

8,658

-115

-171

21

-0.3

-0.5

Aged 65 and over

10,541

39

200

Source: ONS. Copyright: Money Management

Chancellor Philip Hammond was understandably quick to revel in the figures, and data elsewhere has provided further encouragement – and a potential boost to his coffers for the Budget towards the end of the year.

The OBR had forecast the UK government would borrow £45.2bn for the 2017-18 financial year, but actual figures came in lower at £42.6bn. As with GDP, the expectation of revised figures later this year could dim some of the shine. But for now, the data is a sign of encouragement.

Ms Ward says the near-term economic and fiscal outlook could improve further if the government manages to secure a Brexit deal by the autumn. But she claims: “That doesn’t mean the government should abandon fiscal restraint, because the medium-term fiscal outlook remains dire. In the coming two decades, the working population is set to rise by a mere 8 per cent in total compared with a 30 per cent rise in the number of people over 80 who require considerable fiscal support in the form of health and social care.”

Weather or not

In the near term, the question of whether recent data is a blip or something more significant endures. Mr Davies agrees with those who say the struggles seen at some UK companies can be partly attributed to be the weather.

“Some of the retailers and anyone involved in travel quite often had multiple stores shut for multiple days,” he says. 

“It’s not just the customers that couldn’t get there, but the staff couldn’t get there to open the store. We had one of the housebuilders telling us that construction work pretty much had to stop for a week. If you lose one week out of 13 that’s a pretty substantial impact.”

The manager also questions whether GDP is the best barometer to measure the health of an economy. “Partly because it gets revised so much, and partly I don’t think it measures large chunks of the newer bits of the economy very well too,” he explains.