Yes, Hunt IS gaslighting us all

To hear Jeremy Hunt saying “today’s growth figures are proof that the economy is returning to full health for the first time since the pandemic”; you’d think that the UK economy was flying free into the stratosphere. In fact, three months of better-than-expected growth are no indication that we are out of the woods.

The chancellor has his own motive for claiming the world has changed, and it is not rooted in economic data. It is that there is a general election coming.

So, let’s have a look at what is really happening in the British economy.

For a start, Britain has not emerged from a “technical recession”. We have emerged from a recession, pure and simple. Why the BBC has started calling the latest downturn “technical” is beyond me – a conspiracist would suggest that the government spin machine has leaned on them.

So let’s just call it what it is: We were in a recession, and now we are crawling out of it. Not booming or even doing very well, just emerging from a six-month period when the economy contracted in size.

The figures from the Office for National Statistics make that clear. We have grown by 0.6% in three months, but compared with the same period last year the UK economy has grown by just 0.2%. In fact, it has hardly grown at all for two years.

This is a disastrous rate. Annual growth of well over 2% should be normal for the UK economy; it certainly used to be. 0.2% is a tenth of that and the predictions for this year and next are growth of around 1% each year. This is not a great performance; in fact it is a very bad performance.

If you think it is hard to feel much better off with growth of just 0.2%, you’d be wrong. It is possible to feel worse off because as measured by GDP you ARE worse off.

GDP is a measure of the total size of the economy, but that wealth is spread out among the population. If the population increases more than growth does, the average person is worse off not better.

Guess what? Yes, you’re right. The population of the UK is rising, and it is increasing faster than growth. Taking that and inflation into account, we are 0.7% worse off per head than we were a year ago. And that is presumably before you count the tax rises that Jeremy Hunt has introduced.

Of course, none of these details will make it into the minds or mouths of the Tory Party. They have got some growth at last – more, it is true than was predicted for this month – and the sun is shining. So the gaslighting goes on.

The Bank of England is now signalling it is on the verge of cutting interest rates too. Not by much and not immediately – and any cut will have absolutely nothing to do with the government. But interest rates will start to fall this year. And so, Hunt and Rishi Sunak will hang on hoping for the economic good news to move the polls.

Personally, I doubt that voters are ready to credit this bunch with having turned a corner, let alone reaching the sunlit uplands. But the economic news is a straw for the Conservatives to clutch at, and so we are going to hear a lot about how their “plan is working”.

Like the UK’s economic performance, it is not much. But it is all they have got.