Yesterday showed unemployment falling to 4.8%, the lowest since 2005. Wages rose by 2.3%, well ahead of prices. Price inflation fell back despite the Bank’s continuous assurance of inflationary problems ahead, though it might rise next year. Property companies reported increases in rentals, and gloomy valuers only managed to shave a little off central London capital values, where they had been forecasting a big hit after the vote. The workforce participation rate rose to a healthy 74.5%, ahead of the USA and continental countries. Google announced a major new investment in the UK. A major housebuilder told us sales were 19.5% up.
The money supply is accelerating into a a double digit rate of growth, and bank credit is also growing well. All this points to the UK being the fastest growing of the advanced countries this year, and indicates next year too should see good growth. It is high time the gloomy forecasters admitted their mistakes and hiked their 2017 forecasts.
The OBR and the Treasury also need to lift their forecasts. It would be quite wrong in these conditions to feed the Chancellor low forecasts for growth for next year. These would tell him the deficit will be higher, thanks to lower revenues and higher welfare spending. Instead the truth is likely to be very different. I am sticking with 2.2% for next year’s UK growth rate. Given the latest figures it is difficult to see why it should be lower.
Today’s retail sales figures, showing a record rate of growth of 7.4%, confirm the trends.