The IMF reckons that the UK economy will grow at 1.7 per cent this year, slower than the US, a tad slower than the euro area and Germany, faster than France and Italy.
For its forecasts to come true, the UK will have to stage a remarkable recovery. One thing is for sure, a re-kindling of the Dunkirk spirit is the last thing the UK needs.
The UK grew by 0.2 per cent in Q1, and by 0.3 per cent in Q2. but even that doesn't tell us the full story, since the ONS, the organisation which complies the data, has this habit of revising and then re-revising its data on subsequent occasions.
It would appear that we have seen an expansion of around 0.5 per cent in the first half – that is a crawling pace. Yet the IMF projects growth of 1.7 per cent for the year – in other words, it forecasts a much stronger second half.
And yet real wages are falling – and are likely to fall even further this year. The pound has seen sharp drops since the UK election which will exert more pressure on inflation, and push down even further on real wages.
The latest purchasing managers indexes (PMIs) covering the UK in June pointed to growth of 0.4 per cent – an improvement for sure, but not good. The PMI tracking services indicated that service sector firms are their least upbeat about the year ahead since last July.
We will get the PMIs for July next week, but we have already had flash PMIs – which give a kind of sneak preview of what the full data will say – for the euro area, and the US. In fact, the PMI for the euro area fell to a six-month low, but then the last six months has seen the index surge, and the fall in July was not that great. What we can say is that the indexes suggest growth in the region of around 0.6 per cent in Q2.
We have had some more news on Germany, the ifo business climate index – a pretty reliable forward indicator – has jumped to a record high. Meanwhile, in France, the INSEE index tracking business confidence rose to a six-year high.
In the US, the flash PMI rose to a six-month high, and the latest US Consumer Confidence Index from the Conference Board has just risen to its second highest reading in 16 years.
In short, the first half was not good for the UK, it was much better for the euro area and the US. The runes for the US and euro area are good, for the UK they are worrying.
The IMF, by contrast, expects the German economy to grow by just 0.1 percentage points faster than the UK this year, the French economy to grow 0.2 percentage points slower.
Yet in Q1, Germany grew at 0.6 per cent, France by 0.4 per cent. And to repeat, all the indicators are that Germany and France are growing even faster.
So why the IMF projections?
And that takes us to the Dunkirk spirit.
It is indeed a magnificent film – but those who think it captures the mood of the nation in 2017 miss the point.
There is no need for the UK to fight the EU on the beaches, there is no need for us to say, “we will never surrender.” Those who try to conjure up the spirit of Churchill are creating a false need.
The UK is suffering from a self-inflicted wound. It needs to see sense, and have a reasoned debate in the media, not jingoism, and an erroneous sense of a nation under siege from nations that pose a threat to our freedom.
There is a feeling in the EU that it would be to everyone’s interest if the UK suffered some kind of humiliation. Unlike the rest of Europe, this is not something the UK has experienced – not in centuries. The UK was not invaded or defeated in World War 2. The difference in this experience has created a certain different set of attitudes – on the mainland it has fostered a sense of togetherness, in the UK it has created a slight sense of superiority.
In 1940, the UK was against it. 400,000 British troops were stranded on the beaches of Dunkirk and it took a remarkable sense of national unity to save so many.
In 2017, if anything, it was the EU that felt under threat – if anyone has taken on a Churchillian spirit it is Emmanuel Macron – Holland has fought off the threat of nationalism, so has France. The forces of moderation have fought on the beaches and they have won a battle, it is to be hoped that they never surrender.
Meanwhile, in the UK, Boris Johnson says that the EU can go whistle if it expects the UK to pay a divorce settlement – but we all know the UK will, and the EU negotiator, Michel Barnier may well feel the need to whistle while he works. Liam Fox, the trade secretary, has impressed no one with his comments about chlorinated chicken.
Across the channel, there is a sense of exasperation with the Brits. Fabian Zuleeg, the chief executive of the European Policy Centre, said recently that the UK has no "real appreciation of the view from the other side of the channel.”
Maybe, in its economic forecast, the IMF has been sucked in some Dunkirk spirit, but just recall the words of Churchill, when Nazi propaganda likened the UK to a chicken and said it was set to ring its neck. Churchill said: “Some chicken, some neck.”
Maybe in 2017 we can say ‘some chlorinated chicken, some Brexit, some pain in the neck.”
