Three reasons why we should speak about our economy with greater pride and how we can improve the resilience of our food prices
Our economy is in better shape than most other developed economies around the world. So why are we allowing the debate to be about how badly we are doing?
Here are three reasons we should be speaking about our economy with pride.
Low unemployment
More people are in work than a decade ago; our unemployment figures are lower than that of the European Union and the average of the OECD countries that comprise the world’s developed economies.
In the aftermath of the Covid-19 pandemic, we saw unemployment rates rise across the OECD, and youth unemployment is a challenge across developed economies. However, even our youth unemployment rate is lower than that of G7 countries, which represents the major advanced economies.
To put it into perspective, France’s unemployment rate at the end of last year was almost double that of the UK.
Economic growth
Our economy has also grown more than that of France of Germany over the last ten years. Whilst in the UK the growth in real GDP was 14.2 per cent over the decade, it was 10.6 per cent in France and 9.5 per cent in Germany.
We should not be judging the overall success of our economy by the temporary dip we are currently experiencing. While economists will say that, at the end of last year, we experienced a technical recession, already in January we saw economic growth.
Lead indicators for economic activity, such as Purchasing Managers’ Index, also indicate that growth will pick up this spring; the overall PMI reading is higher for Britain than all other major economies. We are also predicted by PwC to be the fourth best performing G7 economy relative to pre-pandemic levels, outperforming France, Germany, and Japan this year.
Inflation
Global events such as the Russia-Ukraine war and the pandemic have impacted the cost of living around the world, from energy bills to the cost of food. Yet in the UK, our inflation is still lower than that of the OECD average. While our inflation annual growth rate was 4.2 per cent last year, this was lower than the 5.4 per cent average that other developed countries experienced.
(The USA has been more immune to the effect of the Russia-Ukraine war on their energy bills, in part because their shale gas revolution made them the world’s top oil and gas producer.)
—
Are we top of the class when it comes to economic performance? Many will argue that the USA has that spot, with unemployment and inflation number even lower than that of the UK and higher growth. However, that should not distract from the fact that we are among the better-performing comparable economies, and doing better than overwhelming majority of our peers.
As we strive to do even better, let’s also assess ourselves fairly. We should not forget that we are not immune to what happens in global markets, and must remember to take a comparative perspective. Critical thinking should not turn into self-flagellation.
That is not to say there is not more work to be done. Although wages are outstripping inflation, households are still under pressure.
There is also still work to do in continuing the work in increasing the productivity of our cities and tapping into their potential to fuel much-needed growth. Productivity in our 11 large cities (Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield) remains below both the British and OECD averages.
Not only is increased productivity is a textbook way to see wages increase, more balanced growth would also take the pressure off London and the South East, especially in the housing market. There are only so many more houses that we can build in that part of our country.
One area where our economy has felt global shocks more than that of developed economies is food prices: food inflation is higher in the UK than the OECD average. (However, that’s also the case in France – we experienced a 9.2 per cent increase compared to the 6.7 per cent OECD average while France experienced 7.9 per cent and Germany experienced 5.8 per cent.)
A big factor in this is that we are the world’s third-largest net importer of food and drink according to the Food and Agricultural Organisation of the United Nations. By boosting our capacity to produce more food in Britain, we can improve our resilience to global shocks and further boost an agri-food and seafood sector, which already creates over £120bn of value for the economy every year and employs over four million people.
Increased domestic production of food will also mean more rural business and therefore stronger rural economies for a more inclusive and balanced growth across the country. In 2022, we published a Food Strategy to transform our food systems. With elections approaching, further steps to build a more resilient food systems should form part of our party manifesto.
