As we come to the end of the year, the Brexit induced economic slowdown is well under way. The Guardian has a summary by a couple of leading economists (HERE) who both come to the same conclusion. Employment is no longer rising and unemployment is no longer falling. Neither man expects growth above 1.4% next year with real wage growth flat or falling.
However, if I try to make this point to leave voting friends and relatives it is treated as if falling living standards are unconnected with Brexit. People keep returning to the simple idea we will "save" money by not paying into EU funds, without seeing that a smaller economy, compared to what it was expected to be before the referendum, means we will have LESS money to spend, not more.
This point was made several times before the vote by David Cameron and plenty of others. They were condemned as scaremongering but it is all coming true and perhaps even worse than was forecast in 2016. My concern would be if the economy didn't suffer a big jolt but simply declined slowly and almost imperceptibly so that it doesn't dawn on the wider public until it's too late.
A few days ago it was announced that local councils would be able to raise council tax by up to 6% without triggering a vote (HERE). The Tories passed a law some time ago requiring them to ask local residents before they were able to increase the tax by more than 5%. I suggested to a leave voting member of my own family that this was partly caused by Brexit but the very idea was dismissed as nonsense.
But the obvious result of a combination of a slowing economy, reduced tax revenues while continuing to run a large public sector borrowing requirement is increased taxes. This is what The Treasury and others warned about.
Now, the IMF are cutting growth forecasts again and warning that Britain may need to raise more money from taxes to bring down its budget deficit after relying heavily on keeping a tight grip on public spending according to this report in Reuters HERE. I also note the IMF have defended their pre-referendum forecasts saying they (the experts) were right about the slow down.
The studiously impartial BBC say UK income growth is "sluggish" (HERE) quoting the ONS saying, " UK households' expenditure had exceeded income for four quarters in a row, suggesting that people are dipping into savings to fund their spending. It said it was the first time since current records began in 1987 that this had happened over such a long period of time.
The Telegraph, swimming against the tide as usual, has an upbeat view of the British economy (HERE) as we come to the end of 2017. The article claims the economy is accelerating to defy gloomy forecasts but reading the text we find one economist saying he expects growth of 1.8% this year compared to 1.9% last year. Apart from the fact that 1.8% is quite an optimistic figure anyway, this is like "accelerating" from 60mph to 55mph!
The Telegraph report talks about the UK car industry, claiming manufacturers were "boosted" by rising exports and sales of new car models. We know that car sales in the UK actually dropped (HERE) by about 30% last year and production fell by 4.6% according to Reuters.
As far as the economy is concerned there are still two parallel worlds, one real and the other living in the pages of The Telegraph.
