A whiff of wishful thinking about Hunt’s declaration of economic ‘soft landing’ | Business News
Most economists would hesitate before describing Britain’s situation as a “soft landing” but on the brink of a general election, the chancellor was at pains to insist there is a positive outlook.
By Ed Conway, Economics and data editor @EdConwaySky
It’s not quite a Mission Accomplished moment – the equivalent of that day in 2003 when George W Bush stood on an aircraft carrier and prematurely declared the Iraq war was over.
But Jeremy Hunt’s declaration in our interview in Washington DC that he had achieved a “soft landing” in the economy certainly has a whiff of wishful thinking about it.
Economists spend much of their time dreaming that, following a crisis, or a set of crises, they will be able to engineer a slow glidepath, ensuring there is no painful economic catastrophe. Yet it rarely actually happens.
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In the UK’s case, most economists would hesitate before describing Britain’s situation as a “soft landing”.
The economy is, after all, still formally in recession. At best, gross domestic product is flatlining.
Factor in population growth, and it’s shrinking quarter after quarter.
Yet the chancellor was at pains to insist today that, in fact, the outlook is strikingly positive.
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Of course, that confidence comes as he gears up for an election in which the economy is likely to be centre stage.
The polling suggests the Conservatives are heading for a decisive loss, and the absence of an economic “feel good factor” isn’t helping.
So one can understand why he wants to paint the picture of a strong economy.
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Yet peer at the data and it’s hard to share his confidence.
With interest rates still at 5.25% and inflation still above target, the squeeze families have been facing in recent years has barely abated.
The UK is expected to grow at a slower rate than nearly every other G7 economy this year, according to the latest International Monetary Fund forecasts.
Yet the chancellor is not alone in clinging to optimism.
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Here in Washington, most central bankers and finance ministers are quietly hoping that all the economic and military challenges facing them – from war in Ukraine and the Middle East to China’s tensions with America – do not crystallise into something more horrifying and all-encompassing.
They, like Jeremy Hunt, would much rather keep on talking about soft landings.
