Ian McConnell: Boris Johnson’s performance writ large in these realities
If the hot air and volume from the Conservatives’ big talk drove economic output, UK gross domestic product would be surging.
And some voters who do not follow economic data closely could be forgiven for thinking the UK was booming, given the triumphalism of Mr Johnson, his ministers and Brexiters at large in the run-up to and following the UK’s technical departure from the European Union on January 31.
However, the reality of the situation is quite different. Data published by the Office for National Statistics yesterday showed the UK economy ground to a complete halt in the fourth quarter of last year. The data confirmed economists’ expectation that GDP would turn out to have been flat quarter-on-quarter in the final three months of 2019. The figures showed production output tumbled 0.8 per cent and services sector growth slowed to just 0.1%.
Over 2019 as a whole, another year dominated by Brexit, UK growth was 1.4%. This is marginally faster than weak expansion of 1.3% during a dismal 2018, but, as the ONS notes, it is “one of the slowest rates since the financial crisis of 2008 and 2009”. And, given the UK’s unimpressive performance over this period, that is saying something.
Publishing the fourth-quarter figures, the ONS said: “The underlying momentum in the UK economy continued to show signs of slowing. Quarterly GDP growth has been between 0.2% and 0.3% in 2019 on average, continuing the slowing that has been experienced over the previous five years.”
Over 2019, production sector output declined by 1.3%. This was this sector’s first annual contraction since 2013, driven by a 1.5% tumble in manufacturing output.
Mr Johnson and Chancellor Sajid Javid continue to paint a picture of a bright post-Brexit future for the UK, a vision that is as enthusiastic as it is vague.
However, we must remember Mr Johnson has been Prime Minister since last summer. It might have been the December 12 General Election which secured his longed-for Brexit but he cannot say the UK’s dismal fourth-quarter performance did not occur on his watch.
Likewise, the Tories cannot claim that someone else has been responsible for the UK’s weak performance over nearly a decade now. They have ruled the roost, with their economically and socially damaging austerity and then the Brexit fiasco which, in spite of the UK’s technical departure and some people’s seeming bizarre view that EU exit effects should not be talked about any more, has a long, long way to run.
Firstly, we will have the drama of the will-they-or-won’t-they do a trade deal, as Mr Johnson and his Government talk tough and the clock ticks down loudly on the transition period which runs to the year-end. Then, of course, we will have the actual effects of leaving the European single market over years and decades. The attitude that seems to be developing among some Brexit voters and converts – that there should be no critical assessment of the situation and certainly not by pro-Europeans –seems distinctly undemocratic. That said, it chimes with a seeming desire among a small minority of Brexiters in recent times to suppress free speech on the issue by bringing various pressures to bear, including mockery of “Remoaners”.
Given the effect on living standards and the economy, it is crucial the UK Government is held to account on its behaviour in the very short period between now and the year-end. The Tories’ stated position is that they want a deep free-trade deal with the EU but it is at times almost impossible to reconcile this declared aim with their actions. The Brexiters need to realise this is the start of their desired journey, not the end of it. Many in the Brexit camp who have not been mesmerised by the “Get Brexit Done” spin will hopefully be well aware of this.
Financial markets do not look to have been reassured at all by what is coming out of the mouths of Mr Johnson and his Government in relation to the UK’s future relationship with the EU.
Sterling has this week dropped to a two-and-a-half-month low against the dollar, falling to just above $1.28 on Monday. It yesterday traded either side of $1.29. It is below levels around $1.31 at which it traded as voters went to the polls on December 12.
The pound surged to $1.35 after an exit poll on General Election night, showing the big Tory majority. However, sterling has tumbled since as the reality of the UK’s situation and the pronouncements and actions of Mr Johnson’s Government have been contemplated by financial markets.
Those wishing to assess Mr Johnson’s performance, including the Prime Minister himself, would do well to look to recent moves in sterling and the data showing the UK economy having ground to a halt.