How do the Project Fear prophets explain the good news about Britain’s economy?

10 May 2019

11:15 PM

10 May 2019

11:15 PM

Of course, we shouldn’t read too much into a set of good economic figures when they are so obviously down to stockpiling ahead of Brexit. If GDP rose by 0.5 per cent in the first three months of 2019 it was only thanks to all that condensed milk we have all stacked in the understairs cupboard – that and the riot helmets we all went out and bought in case of a hard Brexit and the marauding masses trying to break into houses in order to pilfer our said emergency store.

Yet you might think that hardened Remainers could just admit to a tiny of nugget of good news in that the economy has continued to defy the recession they so confidently predicted would result from a vote for Brexit. But not a bit of it. According to a Guardian news report on the story, the unexpectedly strong performance of the economy was “helped by unprecedented stockpiling by manufacturers fearful of the impact from a no-deal Brexit.”

The report went on to focus on the fact that March was the weakest of the three months, confidently blaming it on “widespread uncertainty about the Brexit negotiations”. The BBC, too, led its report with the words: “The UK economy picked up in the first three months of the year after manufacturers’ stockpiling ahead of Brexit helped to boost growth.” Both reports quote Tej Parikh, a senior economist at the pro-Remain Institute of Directors, who described the figures as “a flash in the pan”. The FT resorted to an alternative source of anti-Brexit comment, Alpesh Paleja, principal economist at CBI, who said: “While it might seem encouraging to see economic growth pick up at the start of the year, this was at least in part due to stockpiling ahead of the recent Brexit deadlines, which is likely to fade away.”

UK GDP since 2016

Well, that has sorted that one out, then. Okay, the economy might not have crashed yet, as we said it would, but mark our words the sky is going to fall in during the next quarter, now we have all these factories stuffed head to toe with crankshafts.

When you have been constantly predicting an economic cataclysm for the past three years and it hasn’t quite happened I guess that you might as well keep wading. But for people whose minds are not quite so affected by the desperate hunt for vindication, there is something not quite right about the above analysis.

It is true that manufacturing was the strongest sector of the economy during the first quarter, growing by 2.2 per cent, but the much larger services sector grew by a perfectly healthy 0.3 per cent – so presumably we all stocked up on haircuts and yoga lessons, too. The weakest sector, as it happens, was agriculture, forestry and fishing, which shrank by 1.8 per cent. If the economy were being driven by stockpiling, surely you would expect food production to be the strongest sector.

As regards manufacturing, let’s assume for the moment there was a significant amount of stockpiling. But does that mean that manufacturers must be ‘fearful’. If they really were fearful for the future of post-Brexit, why would they be building up stocks of parts? Surely they would be contracting their operations or doing as Remainers keep insist they will do and shift production overseas. If they are stockpiling parts it is a sign of confidence that their UK-made goods will still have a market, Brexit or hard Brexit.

Needless to say, if Britain had the economic figures of Italy (in recession) or Germany (which was a whisker away from recession in the last quarter of 2018) we would never hear the end of it. Unfortunately, for their narrative, the economic slowdown has occurred the wrong side of the Channel.

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