AS I SEE IT: TERRY MURDEN says a sharp reversal in the economic outlook has dealt a blow to Labour and the SNP
Let it be said from the outset that I am no fan of economic forecasts. Show me a prediction that has stood the test of, let’s say, a year, and it may worth more than the digital screen it is written on. When it lasts only a month, you have to ask a few questions about the reliability of the research.
In April the International Monetary Fund said it expected the UK economy to contract by 0.3% and plunge into recession. In just a few weeks it has torn up the forecast and now sees 0.4% growth.
The upgraded estimate was well-received by Tory MPs but it raised questions about how the IMF was analysing Britain’s economic prospects post-Brexit.
One backbencher noted that the Washington based group is now run by Kristalina Georgieva, a former EU Commissioner, who followed Christine Lagarde into the job.
“Is it any wonder with such EU enthusiasts in charge that the IMF has downplayed Brexit Britain’s economic strength?” he said.
Setting aside these caveats, the IMF forecast is clearly a bit of much-needed good news for a Prime Minister who is constantly being forced to take on the role of a parent constantly tested by his badly-behaved children. If it were not for the trouble caused by Boris, Dominic and Suella, he might be able to win back voters who are losing faith in a party that seems to be out of control.
Inevitably, good news for the Tories is bad news for the opposition. Labour’s shadow chief secretary to the Treasury Pat McFadden, was only able to say that the IMF report “reveals the fragility of the UK economy”.
The SNP, which has been dishing out press releases almost daily moaning about how Brexit is destroying the Scottish economy and claiming the Tories are leading us all to hell in a handcart, said nothing.
Maybe the SNP had spotted a line in the IMF statement about how concerns over Brexit were “easing”, or perhaps the fact that Germany is now the sick man of the SNP’s beloved EU. The nationalists will feel more discomfort from the fall in inflation and the cut in the energy price cap that will ease pressure on household budgets. Suddenly, the Tory-created cost of living crisis will start to ring a little hollow.
As a consequence, the SNP faithful, who have been preparing for more sabre-rattling at next month’s independence convention, may have to tear up some of their own forecasts of economic armageddon if Scotland is lifted as a result of being part of the UK’s recovery.
Mr Sunak and his Chancellor will, of course, make the most of their progress report from Washington and it may give them some breathing space within their own ranks, particularly if the now-expected growth opens up the prospect of tax cuts.
Then again, with economic forecasts changing more often than the price of supermarket food, all bets could be off again next month.
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business