Emma Duncan says Britain isn’t booming. Here’s why she’s mistaken

In her column for The Times, Emma Duncan pours scorn on the Prime Minister’s claim that the UK is the fastest growing economy in the G7. He has made this claim repeatedly at PMQs and it forms an important part of his argument that sacking him over an issue such as Partygate would be madness just as Britain is emerging from the pandemic and by many measures is even booming. Emma Duncan’s column is headed: “Sadly, our economy isn’t booming after all.”

I should declare an interest: I know Emma, who is both delightful company and extremely well-informed. Her journalistic career, most of which has been spent at the Economist, commands respect. Lesser mortals might be tempted to apply one of her favourite phrases, “annoyingly successful”, to herself, were it not for the fact that envy is such a pointless vice. Indeed, it is only because Emma’s reputation is so stellar that it is worth taking issue with her analysis. Whether or not she is correct about the economy, what she says matters. When influential writers talk Britain down, the loss of confidence can turn decline into a self-fulfilling prophecy. Emma and I are (just) old enough to remember that this is what happened in the late 1970s, before Margaret Thatcher restored national self-confidence in the 1980s. On the economic (if not the political) legacy of Thatcherism, I am glad to see that we agree.

It is nevertheless a fair assumption that whatever Boris Johnson thinks, Emma Duncan is likely to belong to the opposite camp. Hence the barely concealed contempt with which Ms Duncan dismisses as an empty boast his claim that this country is the G7’s growth champion. Her main point is that the UK had such a bad pandemic that our recovery was bound to be faster. Actually, this does not follow: Japan, for example, suffered a worse fall in 2020, yet last year its economy also registered the slowest growth of the G7. The UK’s performance in 2021, with annual growth of almost 7 per cent, outpaced the US, the runner-up, by two whole percentage points. This miracle was largely due to the UK’s head start in the Covid vaccination race, which enabled most restrictions to be lifted last July, well ahead of its rivals. Would such a bold — some would say high risk — policy have happened under any other PM?

Ms Duncan does not dwell on these remarkable facts about 2021. She does, however, tell us that in the last quarter the UK fell back to fifth place in the G7, probably because last summer’s opening up of the economy resulted in the UK being the first to be hit by the Omicron variant, which meant that the quite limited restrictions known as Plan B were reimposed. Thanks to the booster campaign, however, the UK has also been the first G7 economy to emerge from the pandemic, with almost all restrictions being lifted this week.

It is therefore a reasonable assumption that the British economy has already returned to the rapid growth seen in the first half of 2021. And indeed the universally respected International Monetary Fund forecast this week predicts precisely this. According to the IMF, the impact of Omicron has depressed our predicted growth since last October by 0.3 per cent — as indeed one might expect. But the good news is that the UK economy is still expected to grow faster than any other G7 economy in 2022. (My emphasis, because this forecast is not even mentioned by Ms Duncan.) Once again, the USA, now joined by Canada, are the only other G7 economies expected to reach 4 per cent. But the UK is predicted to exceed its competitors comfortably, with growth of 4.7 per cent. The reduction attributed to Omicron is the smallest in the G7, because the UK has recovered faster than the rest.

Once again, this has much to do with the Government’s light-touch policy and focus on booster jabs. No wonder Ms Duncan omits to mention this. Nor does she point out that, but for Brexit, the UK would have been tied to the EU in its handling of the vaccination programme, and hence slower to recover from the pandemic. It is hard for passionate Remainers (of whom she is one) to admit that closer European integration can be a mixed blessing.

She is right, of course, to emphasise the success of the UK’s financial service sector, which makes up 9 per cent of the economy. But then she blames the Government because in the Brexit negotiations the UK “failed to get a deal for visa-free work travel for professionals”. Hold on a minute: who stopped us getting such a deal? It was the EU team, led by Michel Barnier but acting on the orders of Emmanuel Macron and Angela Merkel, that blocked every attempt by the British to obtain such visa-free travel, which would of course have been reciprocal. By refusing such a deal, the EU deliberately damaged its own members’ economies as well as the UK’s, because its priority was always to demonstrate that Brexit must fail. If British bankers and other professionals are denied “passporting rights” in Europe, the responsibility lies squarely with Brussels, not London. With hindsight and the light of the pandemic, such arbitrary restrictions seem all the more petty and pointless. Yet there is seemingly no appetite across the Channel to revisit this or any other aspect of the Brexit treaty. This means that the UK has no choice but to seek opportunities elsewhere in the world, in the hope that over time common sense will prevail in the EU capitals.

One of the PM’s favourite boasts is that the UK now has more people in work than before the pandemic. Emma Duncan’s response is to point out that Germany and Switzerland — in her catchphrase, “annoyingly successful” — are among the few countries to have an even higher rate of participation in their labour markets. Why does she suppose that might be? One reason is that the German and Swiss economies are closely integrated, mainly thanks to linguistic and other cultural similarities. They have always enjoyed relatively free trade with one another regardless of the fact that Switzerland is not an EU member state. This suggests that such trading relationships are mutually beneficial, as indeed economic theory would imply.

There is no reason why the British and the Germans, who also have striking similarities, could not enjoy such mutual benefits — if only the EU did not hinder the cultivation of such bilateral relations. In TheArticle I have long urged the PM and his colleagues to put out feelers to Berlin, especially now that there is a new coalition in office there. Unfortunately, the Ukraine crisis has now overshadowed any such efforts, with British and German national interests now seemingly diverging over the question of how to deter a Russian invasion. It is quite possible that all these predictions of post-pandemic global recovery will be set at naught by one man: Vladimir Putin. Only if the West shows firmness of purpose and solidarity is he likely to back down. Ultimately, because it is a moral science, economics will always remain an inexact

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