Unemployment figures released recently show a marked fall in the number of people who are currently unemployed down by 39,000 to 1.63 million. Not great news for the 1.63 million but certainly a sign that the UK economy is continuing to recover from the recession hit catastrophe of two years ago.
Inflation figures released 14th September show a measly rate of 0.6%, not great news if fuel is your main purchase as this commodity has risen by 13% this year, but surely another sign that the economy is stable and strong.
How is it, then, in a country which apparently doesn’t produce anything that the rest of the world can’t make cheaper and more efficiently, that Britain appears to be recovering nicely from a worldwide recession, even though we have supposedly unloaded a pistol into the metatarsal by deciding that we would rather go back to existing as a rather small and parochial island community instead of joining forces with the economic superpower that is the EU? How are we possibly going to pay our bills by trying to sell tea-towels with pictures of the white cliffs of Dover on them to Chinese businesses who are already making them faster and cheaper than we can? The answer, lies in Westminster. (cue images of Big Ben, Houses of Parliament and London Buses in Trafalgar Square).
Quite literally, the answer lies there, in London. And in Dover. And in Stratford-upon-Avon and anywhere else where tourism is currently flourishing. The answer also lies in your high street, town centre and local shopping mall. It’s anywhere, in fact, where you can find that most invisible of products – Services.
Services are the things we do in this country that appear to just ‘be there’ rather than come into existence as a result of a process of manufacture. Retailers, hair-dressers, dry cleaners and house cleaners are all services that contribute to “GDP” – that most important indicator of economic health. There are also the professionals like accountants, architects, doctors (and nurses) and even Recruitment Agencies! And, guess what, if any of those sell their services abroad – this includes attracting tourists – it counts as an export.
So, there you have it, the UK economy is recovering, growing and even thriving on the things it sells. Even if most of those things can’t be picked up, packaged, put in a lorry and sold in the shops. Good old service industry Britain. But, there was always going to be a ‘but’.
It may surprise you to know that the period immediately before the financial crash of 2008 has become known as ‘the great moderation’. This was because, all the main indicators of economic health, (GDP, Unemployment and Inflation) were all behaving moderately. Not for a week before, not even a year but for an entire decade, between 1997 and 2007 everything looked spectacularly calm.
So, beware the calm before the storm. In 2007, global economic forecasts were universally optimistic. The problem was, the forecasters were looking the wrong way.