The chancellor will love this deluge of great economic news
That’s the narrative, but it is true? What about the golden rays of sunshine bursting through the grey clouds?
To burst the negativity bubble we’ve pulled together the best reasons to be optimistic. And what do you know? There are valid reasons to feel cheerful (including a rather successful publishing franchise). Maybe not swinging-from-the-chandeliers ecstatic, but the recovery is definitely underway. Just consider the following…
Job creation is strong
The employment figures are strong. So strong there have been a number of inquisitions as to how on earth a shrinking economy can generate so many new positions.
Unemployment fell by 46,000 in the quarter to June to 2.56 million, a rate of 8%, and the number of people claiming jobseeker’s allowance in July was 1.59 million, down by 5,900 on June. In the two years to March the private sector created 906,000 net new jobs.
The figures are so good commentators have called them “baffling”.
NIESR says output is growing
Recession? What recession? The National Institute of Economic And Social Research published data last week suggesting output grew 0.2% in the three months ending August. It says: “unless output turns down again, the recession is over”.
Fifty Shades is spanking the economy into life
George Osborne owes the raven haired queen of erotica a drink. E L James is already the best-selling author of all time on Amazon, and now she’s triggering a galaxy of lucrative spin-offs. There’s the official Fifty Shades classical album and the movie trilogy will no doubt whip the country into a spending frenzy, soon to be followed by the musical.
Fifty Shades’ Random House publisher isn’t the only one getting all of the purchase pleasure. Erotic novels of all sorts have been flying off the shelves. In August, eight out of the top 10 novels were erotica, leaving publishers scrambling to find the kinky ramblings of any old author to peddle to horny bookworms. Let’s all cash in!
Then there’s the sex toys referred to in the trilogy which have seen sales spike by 400%.
Cars are motoring
Figures released in August signalled a shift in gear as production rose 22% on last years’ numbers. There are some 1.5 million cars produced in the UK annually, making up 11% of the country’s exports.
The automotive industry has become something of a poster boy for exporting. Despite a fall in domestic car sales (4.4% last year), the industry is going strong and turning over £50bn. Investments by Toyota and Land Rover Jaguar have reached £6bn over the past two years.
Industrial output is rising
The sector recorded the strongest monthly rise since February 1987. Figures from the ONS signalled a 3.2% upsurge in output. The largest contributions to the rise were made by the manufacturing of basic metals (6.2%), mining and quarrying (4.9%) and water and waste management (1.6%).
Service sector output is rising
Are you being served? Well we all seem to be, if the purchasing managers’ index (PMI) for the services industry is to be believed. The index, in which anything above 50 represents growth, leaped from 51 in July to 53.7 in August – the best result since March.
The result was seen as a welcome rebound after the disruptions caused by the Jubilee and an annoyingly wet start to the summer.
Medical devices is a success story
Great export stories are not too common. The June trade figures were pretty awful, with exports down 8.4%. The trade gap for the second quarter rose from £7.8bn to £11.2bn.
The cause for the drop is pretty clear. The eurozone crisis saw a dramatic fall in orders from the stricken nations. Exports to Italy fell 20% in March to May on the same period the previous year, those to Portugal and Spain fell 14.5% and 9.2% respectively.
And there are stunning success stories. Medical devices, for example. John Dean, partner at law firm Withers & Rogers, says the value of the UK medical device export market is more than £24bn, up from £4bn in 2000. It’s an extension of our extraordinary firepower in medicine: George Osborne claims 20% of the top 100 medicines was created in the UK.
VC cash is plentiful
British entrepreneurs really do have a headstart on their European rivals thanks to our venture capital and private equity scene. Of the Tech Track ranking of 100 fastest growing firms in the UK, 45 received private funding. According to the BVCA the UK’s 501 PE and VC funds delivered an internal rate of return (IRR) of 14.3% in the ten years to 2011, compared to 5.9% for pension fund assets and 4.8% for the FTSE all-share index. Last year, the UK private equity industry raised 16.5bn euros, more than 40% of Europe as a whole. Germany, by contrast, raised 3.1bn euros.
The deficit is falling
A tragic survey by the Centre for Policy Studies recently revealed 47% of Brits are so deluded they think the Coalition is planning to reduce the national debt by £600bn by 2015. Only one person in 10 understands that the debt will rise by that figure – it is only the deficit which should fall. And how are they getting on at reducing the deficit? Ok-ish. The deficit has fallen by a quarter, with the cyclically adjusted current deficit falling by 13%.
Draghi has got his ECB deal though
The big bazooka has been fired. ECB president Mario Draghi won the right for “unlimited” buying of eurozone member-states bonds. Spanish and Italian yields are way down – and that’s before the first purchases take place.
Rising up the rankings
The UK is today ranked #8 in the World Economic Forum Global Competitiveness Rankings, up from tenth last year, and ranked sixth in the world for infrastructure. Take that, France (a comedic #21).
Energy is powering up
There are new oil and gas fields planned for the North Sea under a new £1.4bn project which will cre
ate 4,000 jobs. BP wishes to open an International Centre for Advanced Materials – spread across Manchester and Cambridge universities and Imperial College, London. And recent tax breaks for the industry are aimed at attracting £2bn of investment over the next few years.
4G is here
At last! The UK has 20Mbps mobile internet, joining the US, China and Japan. Faster transmission speeds mean more possibilities for app creators. Don’t ask us what (just yet)…but you can bet your Nokia 3210 the new network will spawn some incredible innovations.
Convinced? Let us know in the comments