Why Downing Street’s relief to the economy can be temporary | Money news

Yes, there are all kinds of reservations.

The British economy is still flatlining. An extension of 0.1% is about as close as you can get to zero.

Gross domestic product per Head – a better measure of our standard of living – has shrunk (in fact it has shrunk in two quarters). And Britain remains far weaker than the leading G7 economy – the United States.

But even after taking all that into consideration, it’s hard not to conclude that the chancellor is celebrating Today’s GDP number. After all, economists had expected the economy to shrink by 0.1%. Thanks to a late spurt growing in December, it actually grew.

Until today’s figures, the profile of economic growth in the UK was honestly rather bleak. There was zero cumulative growth since last year’s elections. Thanks to that jump in December – an unexpected late Christmas gift to the chancellor – cumulative growth since the election is now up to 0.4%.

Of course, none of this changes the larger financial picture. The British economy is still stuck in a corner. The enormous growth of migration in recent years means that once you take into account the growing population, there is significantly less income flowing around for each family than there were a few years ago.

And big cuts of the British economy are in desperate problems. Most notably contracting the industrial sectors that used to drive much of the country’s growth at a rapid speed. It’s not just a British problem – it is actually shared with large parts of Europe. In Germany, the economy has contracted for two consecutive years. This de -industrialization is one of the most important issues facing the continent.

And that is before considering a few other awkward problems: The real impact of last October budget is not yet labeled in the economy. The Budget Responsibility Office is expected to largely cut its growth forecasts next month, which can cause the chancellor to further trim the expenses in the coming years.

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Then there are others, even deeper challenges. What happens if and when the United States imposes far-reaching customs duty for the UK import? How does the United Kingdom advice for the dramatic increases of defense that use the White House require? Now, more than ever before, it is quite plausible that external events can cause major influences on the British economy.

In short, while today’s number will be a relief in Downing Street, it is not quite clear how long that feeling of relief will last.