In defiance of all gloomy predictions, growth is soaring and trade is booming
It is only a few months since gloomy economic commentators were confidently predicting that the world was about to plunge into a dark era of protectionism. Yet the global economy begins this year in its healthiest state ever, growing faster than any time since 2011. There has been a change in political rhetoric, but not in the willingness of people around the world to trade with each other. According to the OECD’s most-recent projection, made in November, world trade grew at 4.8 per cent last year. Something seems to be going badly right.
Negative sentiments about the world economy echo those which have hung over Britain’s economy ever since the Brexit referendum. A month before that event, it should never be forgotten, a Treasury paper signed by George Osborne forecast that ‘a vote to leave would cause an immediate and profound economic shock’, causing a recession with half a million more on the dole. Instead, employment has risen by almost 400,000 — and a lack of workers has become one of the UK economy’s biggest problems. Britain’s biggest jobs website says vacancies are up 20 per cent year-on-year, while unemployment sits at a 40-year low. These are the conditions for pay rises to accelerate.
People tend to think the worst. As a species, we have evolved to focus on what is wrong. We are forever telling ourselves that something dreadful is about to happen, whether it be economic Armageddon or climate catastrophe. As the foreign secretary points out on page 20, mankind has never been richer, healthier or less inclined to fight wars. If you could choose any time to be born, not knowing your social position or even nationality, you would choose now.
It is a wonder that the endless talking-down of Britain’s prospects has not done more harm. As the chief economist of the Bank of England pointed out, the economics profession has had its ‘Michael Fish moment’, referring to the weatherman’s dismissal of the 1987 storm and the damage that did to the credibility of meteorology. Like the weather, the economy is the result of millions of forces, often unpredictable.