The economy

Next week Parliament returns from its summer recess.  There is plenty to do and I start the upcoming session feeling both positive and optimistic thanks to economic figures released this month.

Before the referendum in June, we were bombarded by Project Fear, full of unrelenting doom and gloomy predictions should the United Kingdom vote to leave the European Union.  Following the referendum result, these predictions are now being proven false.

Economists had predicted an immediate rise in numbers claiming unemployment benefit. Instead, the latest figures show that there was a drop of 8,600 in the number of claimants. The national claimant rate in July dropped to 2.4% and North Shropshire can boast a rate, lower than the national average, of only 1.4%. The employment rate is now 74.5% – the highest since records began in 1971.

The British economy is faring well, as recent GDP figures suggest uncertainty ahead of the vote did little to damage our economy.  From April to June, UK industrial output increased by 2.1% and in July there was a 1.4% jump in retail sales. High street stores including Next and John Lewis have said that trading has not been affected by Brexit and the average weekly total pay in Great Britain increased by 2.4% in the three months to June 2016 compared with the previous year. Put simply, consumers have not stopped spending and the economy continues to grow.

The fall in the value of sterling is yet to have any real impact on prices as the UK’s current inflation rate is an already low 0.6%. The depreciation was a much-needed correction to our overvalued currency and is proving to be a valuable boost for our food and farming industry and other exporters. It has been a boon to the tourism industry over the summer with visitors from abroad encouraged to spend more thanks to a favourable exchange rate. Also many British people have chosen to holiday at home rather than spend money abroad.

The UK does face difficulties ahead, not least because of the ongoing systemic instability of the Eurozone. A Nobel prize-winning economist wrote recently while Germany is doing “relatively well”, “soaring youth unemployment” prevails in France, Italy and Spain. The UK, however, remains the most popular destination in the EU for overseas firms and inward investment projects are up 11% on the previous year. The three biggest sources – the US, China and India – are all the more like to continue investing following Brexit. We will continue to broaden our reach with emerging markets across the world.

Thus, as we begin to negotiate our exit from the EU, we do so from a position of strength. Britain is the same outward looking, globally-minded country that we were before the summer and before the referendum. We remain open for business and I remain optimistic for the months ahead.