Economic growth smashed consensus by coming in at 0.6pc in the first quarter. The early evidence is that April and May will come in “hot” as well.
The International Monetary Fund has upgraded its forecasts – but only to 0.7pc for 2024, nota bene – and given the all clear on a British soft landing. A second Labour gun has been spiked. We will learn only after the election whether it is a real recovery or a dead cat bounce.
The good news is that UK service exports are booming. They have lifted the UK three notches in the UNCTAD league to fourth largest global exporter in total value terms, surpassing Japan and France. It is an unsung success story of post-Brexit trade.
The bad news is that business bankruptcies are still near a 30-year high, firms are shedding labour fast, and more councils are sliding into “section 114” insolvency. The upward creep in UK unemployment is not far from triggering the recession Sahm Rule.
Slippage in public finances is eating up any budget space that the Chancellor might have had for a pre-electoral give-away in the Autumn, leaving aside the mystery of how the Government intends to pay for a rise in defence spending to 2.5pc of GDP. “This goes some way to explaining the decision to call a snap election,” said Citigroup.
The Institute for Fiscal Studies estimates that “non-ringfenced” spending will have to be cut by 1.9 to 3.5pc in real terms each year under the current economic structure – or be covered by tax rises – in order to bring the public accounts under control.
As it happens, the rating agency Scope warned hours before Mr Sunak called the vote that the UK’s public debt is on an unsustainable trajectory towards 110pc of GDP by 2029. The deficit will remain above 3pc of GDP every year this decade, and net interest payments will rise to 7.2pc of revenue.
It accused the UK of abusing its reserve currency privilege to push its luck, concluding that there could be a “sudden reappraisal” by the capital markets.
My answer to this dismal picture is that we must elect a government that goes to the root of the matter and overthrows the current economic structure. Neither the Tories nor Labour offer any way out of our stagnation trap in this election, and neither have my vote at this juncture.
This country is lucky in one sense. Both leaders respect our institutions. Both are one-nation politicians at heart. There is not the slightest threat to Britain’s values or liberal democracy.
That is not the case in the US where Donald Trump is already drawing up post-inauguration plans that would, if enacted, amount to the end of the Great Republic as we have known it since Lincoln. Nor is it the case in much of Europe, where the political centre is collapsing and identity politics is running rampant.
The persistent failing of British economic management is that the country invests too little, and consumes too much. The recent Stern II report by the London School of Economics says public and private capital formation has lagged the G7 average by 4.7 percentage points of GDP for three decades. The savings rate is half the OECD average.
