Brits have a right to be glum given the cost-of-living crisis, which has plunged millions into poverty. I don’t want to downplay the hardship many people face, through no fault of their own, but new figures suggest the doom has been overdone.
The country is going through a tough time but as I wrote last week, much of the criticism of our economy has been twisted and distorted for political reasons.
Ever since Brexit, a host of international bodies have pinned the country’s every woe on our decision to leave the EU. Even the Bank of England have been swept up in the negative groupthink.
Last year, the BoE predicted we faced the longest recession in history with a hellish two-year slump heading our way.
So far, the recession hasn’t happened, but that hasn’t stopped a heap of prominent economists claiming it’s just around the corner.
Two key sets of figures have shown what’s happening in the real world, and they pretty much rule out the chance of a UK recession.
The first shows consumer sentiment hitting an 18-month high. It’s now “virtually back to normal”, according to accountancy group PwC.
PwC’s leader of industry for consumer markets Lisa Hooker said while inflation remains a concern “we’re seeing fewer people cutting back and spending intentions have consistently improved over the past 12 months”.
It’s not a one-off, either.
The GfK Consumer Life survey modestly calls itself “the most comprehensive & longest-standing consumer trend & prediction study in the world”. It recently reported a rise in UK consumer sentiment stretching back six months.
It’s rare to get a recession at a time when consumer sentiment is rising and unemployment is low, as it is today.
And it’s even rarer at a time when wages are rising, as they are today, up 7.3 percent a year in the three months to May.
Perhaps that’s why consumers are so upbeat. They’ve had a decent pay rise for once.
The pound is rising, too, against both the euro and the dollar. Last September, after the mini-Budget fiasco, sterling looked set to collapse to parity with the dollar, where £1 equals $1.
Today, £1 buys $1.29. That’s a rise of more than 20 percent.
Sterling weakness was widely declaimed as a sign of our national decline. So what does sterling strength tell us? I’ll leave you to decide.
READ MORE: UK face ‘worst house price crash’ in world. Except I don’t believe it
Now for the second piece of positive data. The Confederation of British Industry’s much-watched business optimism survey hit a two-year high in July, as orders rise but prices fall.
It seems that British businesses are just as resilent as our consumers. By contrast, the eurozone is in chaos and Germany is in recession. Which is very sad and no reason to gloat at all.
There’s still time for the Bank of England to mess everything up by hiking interest rates again and again, as it seems hellbent on doing.
Still, we’ve survived everything BoE governor Andrew Bailey has thrown at us so far, so I’m sure we’ll get through his next batch of unforced errors, too.
Even our stock market is in a sweet spot, as global investors realise we’re not a total basket case after all.
The big question is what will happen to the housing market. Will property prices finally crash?
They’ve also been surprisingly resilient, falling just 2.6 percent in the year to June, according to Halifax.
I expect a slide but predictions of a 15 percent or even 25 percent drop look more like hysteria than cool-headed analysis.
The UK still faces a host of troubles and our national debt terrifies me, but the great British consumer is standing up to the worst, and it’s great to see.
