Jeremy Hunt struck an upbeat tone following the publication of the most recent financial progress information for February.
“The financial outlook is wanting brighter than anticipated – GDP grew within the three months to February and we’re set to keep away from recession,” he stated.
In some respects he is proper.
Regardless that the nation was deep right into a winter power disaster, Britain prevented a recession in the direction of the top of final yr.
The economy confounded expectations once more in January to eke out progress of 0%.
At 0%, February’s performance was a little weaker than expected however the economic system has been in optimistic territory for the previous three months.
Nonetheless, there is not an enormous quantity to rejoice.
Whereas the economic system has proved extra resilient than some feared, this does not change the general image, which is certainly one of financial stagnation.
In February, the nation was held again by industrial action of academics, civil servants and healthcare staff, which weighed on public sector output.
Output within the schooling sector dropped by 1.7% month-to-month, subtracting 0.10 share factors from progress in GDP.
Within the public administration and defence sector, it fell by 1.1%, subtracting 0.06 share factors from GDP.
The remainder of the economic system fared higher.
Within the non-public sector, output rose by 0.2% within the month as gentle climate boosted output within the development, hospitality and leisure sectors.
These figures are an enormous departure from 20 years in the past when Britain loved progress of between 2-3 per cent a yr.
As an alternative, we are able to count on the economic system to shrink by 0.3 per cent this yr, if latest forecasts by the Worldwide Financial Fund (IMF) are to be believed. This may make Britain the worst performer of our G7 neighbours.
Once more, these forecasts are an enchancment on earlier projections however not sufficient to dramatically change the nation’s prospects.
Weak progress mixed with excessive inflation bodes in poor health for our residing requirements.
The Workplace for Funds Accountability is pencilling within the largest two-year drop in disposable incomes since the 1950’s.
Nonetheless, it is a sophisticated dynamic as a result of efforts to stamp out inflation usually inflict – and require – a interval of financial ache.
If something, brighter than anticipated financial information in latest months will give the Financial institution of England extra respiratory room to lift rates of interest from their present degree of 4.25%.
The total results of the earlier charge rises haven’t but filtered via however additional rises could also be required to dampen financial demand sufficient to carry costs underneath management.
Sadly, a policy-induced recession later within the yr could also be vital.