![]() ![]() But it would be daft to assume the odd quarter point on interest rates will hold things down when energy prices are soaring. The Bank of England has started to raise interest rates and the Federal Reserve in America and the European Central Bank will do the same. The UK inflation rate, at 5.1 per cent, is actually a little lower than Germany's 5.2 per cent and a lot lower than the 6.8 per cent in the US. Inflation is a huge worry at a global level. That five per cent growth the IMF expects would be just fine. If the world has a good run, and it is hard not to see this as a year of solid growth, the UK will get its share of the expanding cake. The Bank of England has started to raise interest rates and the Federal Reserve in America and the European Central Bank will do the same (file image)įor the UK, as one of the most open economies in the world to trade and investment, this is important. But after a serious recession (and my word we have had that) there are always several years of decent growth, interspersed with bumps along the way. The world is still putting everything back together again, and that will take several years. That, I hope, will on balance be a positive for Britain. ![]() ![]() That is negative.Īnd third, there are huge structural shifts taking place as the world adjusts to a post-pandemic economy and the UK to a post-Brexit one. The second is that there is the gnawing problem of inflation. One is that the world is still in the early stages of its recovery from the carnage caused by Covid-19. In the coming year, I think there will be three big themes that dominate our economy. It is simply to say that we should look at the world economy – and Britain's place in it – with a calm and balanced eye, and ignore anyone who twists the data to score political points. That is not to defend blind optimism – and there have to be real concerns that financial markets may have become over-optimistic, with the FTSE 100 roaring to its best year since 2016. If everything is terrible you can't fix things that need fixing because you don't know where to start. Whatever the reason for our pessimism, the plain truth is that it is often absurd and almost always deeply paralysing. Say they are getting better and you are classed at best as naive and at worst as a fool. Say things are getting worse and you are seen as a sage. His research identified a form of intellectual one-upmanship in complaining about modern society. Steven Pinker, the bestselling Canadian professor of cognitive psychology, gives us a clue to why. And the better educated people are, the stronger that bias seems to be. Many people across the developed world – albeit less so in booming China and India – display a similar negativity bias. The economic picture depends on which aspect you look at.Īnd in Britain there is a tendency, at least among a sizable chunk of our society, to focus on the negative rather than the positive. The most recent official statistics show there are more job vacancies than ever before in our history – more than 1.2 million to be precise (stock image) To start with, we have a stronger job market than at any time in most people's lives – certainly since I began work in the 1960s. Furthermore, the IMF expects five per cent growth this year. If that turns out to be right, it would be the fastest growth since 1941. That may be true (though we often find, years later, that the stats were wrong), but the IMF also expects growth in 2021 to have been 6.8 per cent. The International Monetary Fund (IMF), for example, reported our economy shrinking by nearly ten per cent in 2020. There were many reports that the UK was one of the hardest hit by the pandemic. Nostalgic minecraft screensaver driver#Next, take overall growth – the key driver of jobs, prosperity, living standards and so on in this country. But it is equally true that average earnings are up in real terms (that is, after allowing for inflation) by 3.1 per cent year on year. Meanwhile, it is true that consumer inflation at 5.1 per cent is already a real concern, and will go higher. The most recent official statistics show there are more job vacancies than ever before in our history – more than 1.2 million to be precise. The Resolution Foundation think-tank says families will see £1,200 added to annual bills because of soaring gas prices and looming rises in National Insurance (stock image) ![]()
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