The Times has reported that Britain ended last year as the strongest of the world’s advanced economies, with growth accelerating in the six months after the BREXIT vote.
Business activity hit a 17-month high last month, meaning that the economy grew by 2.2 per cent last year — more than the six other leading nations, including the US, Germany and Japan.
Far from slowing after the referendum in June, as predicted by the Treasury and Bank of England, growth has improved.
Andrew Haldane, chief economist at the Bank of England, suggested that economic forecasters were facing a “Michael Fish moment” over their mistaken predictions. Mr Haldane compared the profession to Fish’s infamous assurance of “no hurricane” on the eve of the great storm of 1987.
He also admitted to shortcomings in pre-Brexit predictions, saying that “the data has surprised to the upside”.
He insisted that the Bank’s errors were “more a question of timing than of a fundamental reassessment of the fortunes of the economy” and warned that inflation would squeeze household incomes this year.
He said that a slowdown was still likely. The Bank is forecasting growth this year of 1.4 per cent, which would put the UK in the middle of the G7. However, Steve Baker, the Brexit-supporting MP, said that the performance of the economy since the referendum was a reproach to those who warned of dire consequences. “This is another moment to reflect that the horror stories that we were told simply didn’t come to pass,” he said.
An assessment by Cambridge University criticised “flawed and partisan” Treasury forecasts of Britain’s economy outside the EU. Only one, the fall in sterling, had proved correct, according to the Centre for Business Research. Treasury predictions on the prospects of trade outside the EU came in for particular criticism in the academic assessment published last month.
“We have looked very carefully at what the Treasury has said about this and we find its work very flawed and very partisan. It is not objective,” Graham Gudgin, one of the authors of the report, said.
Britain’s robust performance means the economy heads into 2017 on solid ground. James Knightley, UK economist at ING Financial Markets, said that it “indicates that the UK economy has strong momentum”.