In the first part of this year the UK economy grew and no one felt a thing. That’s very bad news for government – and for everyone.
Rachel Reeves grasped at recent figures from the Office for National Statistics as clear evidence that her strategy was working, and to argue that it would be foolhardy to destabilise it now, when the IMF announced on Monday that it was upgrading the UK’s growth prospects for 2026 from 0.8% to 1%.
The chancellor must seek solace where she can, and an increase of 0.6% in UK growth over the first quarter was a slightly better outcome than expected. But GDP numbers can fluctuate quite violently: in the first quarter of 2021, for instance, the economy shrank by 1.6% before rebounding 4.8% the following quarter. Without the idiocy of Brexit, all the numbers might look much better. The IMF has also warned that, out of all the advanced economies, Britain would be the one most affected by the Iran war.
The general view seems to be that there will at least be some level of growth. But even so, the average voter will probably not be celebrating.
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Imagine the reaction of most workers were they to be offered a pay rise of 0.6%, or even 1%. The stream of invective would be a completely reasonable response as, since the global financial crisis of 2008, real wages have barely grown for the majority. Recent efforts to increase the minimum wage have only a marginal impact, and have not encouraged firms to add to staff.
After years of hardship, some remaining optimists hoped that a change of government would signal a change in their fortunes. The government even indicated that 2026 was the year when they would begin to feel the benefits of a Starmer administration.
But it has not happened. Even though some of the problems the country has encountered – Trump’s various madnesses and soaring food costs – are largely outside the UK’s control, the government’s missteps have not helped. National insurance increases, for instance, have stifled job creation.
The idea that a “feel-good factor” might come into play seems like a dream. It is now almost impossible to imagine any British prime minister having the sheer audacity, let alone the ammunition, to stand up and declare, as Harold Macmillan did, that “most of our people have never had it so good”.
That was in July 1957 and Macmillan was talking about people who had mostly lived through one world war and, in some cases, two. They were experiencing a Britain in which prosperity was growing and beginning to spread.
Today, people see the opposite happening. The middle class is being increasingly taxed while its offspring struggle to come anywhere close to matching their lifestyle. Many find themselves sandwiched between trying to help their children while also dealing with elderly parents caught in the ruinously expensive social care system.
It was notable, although not surprising, that social care, a massive problem, did not feature in the largely anodyne King’s speech. Instead, this crucial issue remains firmly parked in the Louise Casey consultation process.
For many people, the dearth of decent, affordable housing remains a dreadful blight on their lives. Ambitious housebuilding targets have been set, but have not come close to realisation. For those who have managed to clamber on to the housing ladder, the prospect of an imminent rise in interest rates has assumed frightening proportions.
Consumer price inflation ran at 3.3% for the year to March, far higher than GDP growth. For the millions of people who only get through the week courtesy of some state benefits to help them, the prospect of cuts to the welfare bill must be a growing threat.
The war still raging in Ukraine, horrors in the Middle East and a new wave of antisemitism upset many Britons, as does the growing hostility to migrants. Increased nervousness about the country’s own security is beginning to spread from defence chiefs, who are anxious to increase their budgets.
Reasons to be cheerful do seem to be thin on the ground. Temporary escape to the delights of a theatre, sports match or restaurant is increasingly beyond the spending power of many people.
And yet a small coterie seems able to swan from private jet to astronomically expensive hotel, pausing en route only to pay huge sums for a pair of shoes.
The ingredients for revolution are amassing. The people may not reach for pickaxes, but discontent will be vented at the ballot box. It could be very messy.
