As I See It
Bad timing means the joke may be on Holyrood
The same might be said about politics. Yesterday’s dire warnings from the Scottish Government of the likely impact of the Brexit vote look a little ill-timed in view of figures suggesting both the UK and Europe have fared better than expected.
Transaction figures from HM Revenue and Customs and from house builders indicate that the predicted slump in the housing market has not happened. Persimmon this week reported a 29% jump in first-half profits. The firm said customer interest since the Brexit vote had been “robust”.
Supermarkets were boosted by warmer summer weather and an Olympics feelgood factor, giving the best performance since March, according to Kantar Worldpanel.
UK manufacturers have seen export orders hit a two-year high as they take advantage of the fall in sterling. Less than a third of the 17 manufacturing sub-sectors reported export orders at below normal levels.
Anna Leach, the CBI’s head of economic analysis and surveys, said manufacturing output growth was coming in “stronger than expected”. Manufacturers, she said, will welcome the new government’s focus on industrial strategy as well as the Chancellor’s recent guarantee over EU funding, which will help to provide certainty for universities and businesses investing in innovation and research and development.
Not much sign of pessimism and slump here, though it has to be said that in most cases these reports are accompanied by cautionary warnings that the full effect of the Brexit vote is yet to come through.
But given the unreliability of economic forecasts, evidenced by constant revisions to the figures, there is also more than enough reason to believe that things might just turn out better than expected.
To ease the anticipated pain the Bank of England has made its first cut in interest rates for seven years and is pumping more money into the economy. One mortgage provider this morning reported a rise in enquiries and said the bank’s interest rate cut had “created something of a feel-good factor in the market”.
The full effects of these measures will not be known for a year to 18 months, by which time we should have triggered Article 50 to exit the EU.
The UK government has indicated that it will press ahead with the process but, as this has never been done before, there is understandable and quite reasonable hesitation. Rushing in with no clear plan or preparation would be foolish and potentially damaging.
In the meantime, the Scottish government is likely to continue pushing out gloomy forecasts including its latest statement claiming the economy and the public finances will be robbed of up to £15bn by 2030. That looks like a very ambitious forecast, given that few can predict what will happen over the next three months.
Whatever their provenance, these figures will be reiterated because they suit the Scottish government on two counts. First they support the case for retaining closer ties with the EU. The First Minister will therefore use every negative document as a weapon to beat Prime Minister Theresa May into doing more for Scotland.
Secondly, they deflect criticism of the Scottish government’s handling of the domestic economy. If timing really does count then yesterday’s latest attempt to blame Westminster came just 24 hours ahead of publication of the government expenditure and revenue statistics (GERS) which is expected to make grim reading.
There are clearly some weaknesses in the economy. Investors have withdrawn funds from property companies, activity in some sectors has slowed and the outlook generally is, at best cautious.
Ultimately, though, a constant diet of bad news could be self-defeating. What will help boost the economy, apart from stimulus measures and investment in infrastructure, is a dose of confidence. Constantly being reminded that things are getting worse will only make Holyrood’s grim predictions come true.