Daunting debt obligations and the looming prospect of economic protectionism mean today’s positive economic news may be short lived, says Rory Broomfield. 

It’s a good news day. Figures put out this morning see the UK top the chart of the fastest growing economies in the G7.

This encouraging news helps to dispel many of gloomy predictions that came out of the Treasury and Bank of England during the Brexit referendum last year. Not for the first time, these central planners and forecasters have been proven wrong over their post-Brexit vote predictions.

This is the third successive year the UK has topped the G7 economic growth table. But the real challenge now is to translate this economic growth into benefits within the real economy. This process began in 2010. During the period 2010-2015 the UK economy created more jobs than the entire EU combined. Indeed, it has been claimed that from 2010-2013 the great county of Yorkshire created more jobs than the whole of France during the same period.

But this is 2017 and, with this extra growth, extra opportunities for the people of Britain need to follow. Again, here we have also had some good news today in this regard: there has been an increase in jobs in UK manufacturing. This is combined with the UK having its lowest level of unemployment in over a decade and, with the correction of the pound, an opportunity to restructure the country into a more outward looking economic giant.

Thankfully, this vision of a global Britain – one that is outward looking and trade orientated – is a vision that the current government seems to subscribe to. As such, most members of The Freedom Association and Better Off Out campaign would have broadly cheered when they heard Prime Minister Theresa May’s speech at Lancaster House the other week. The message was clear: the government believes in free trade and in making Britain bolster its status as a global player.

Questions remain though over whether the government’s more interventionist approach at home will help to create the conditions which raise the incomes of people throughout the UK. This is where the economic statistics translate into the real economy – into reality for most people.

There is good news on this front: real wage growth is up. Year-on-year average weekly earnings including bonuses in the United Kingdom rose 2.8 per cent year-on-year to £509 per week before tax and other deductions in the three months to November of 2016, following an upwardly revised 2.6 per cent increase in the previous period.

But will this good news continue?

The government’s approach so far seems to be an abandonment of so-called austerity and a plan to direct investments into both infrastructure and in new areas of economic development. This seems to be an approach similar to that the one about to be embarked upon by Donald Trump in the US and was described in Mrs May’s Lancaster House speech as part of the process of “fairness”.

This process of “fairness” will see increased state involvement within the economy. There have been multiple warnings about this in the past but a particularly notable one was penned by the economist Ryan Bourne and highlighted the perils of protectionism in the US. If the government fully enacts this sort of approach, there could be trouble in helping wage growth and job opportunities to rise due to the potential drop off in both foreign investment and internal growth.

The potential problems that could arise out of a renewed interventionist approach by the state is that the UK could fall off the cliff when it comes to our debt obligations. The country is in a perilous situation: due to the economic strategies employed by Gordon Brown and George Osborne, bond issues and UK obligations have gone through the roof. As a result, the UK has an official national debt in excess of £1.7 trillion. This is a huge amount, equivalent to £26,370 per person, £63,800 per household or £125,956 per child. Put it another way: it’s nearly 90 per cent of what we officially make every year. If the government increases spending, and interest rates rise, the economic upturn may quickly disappear. As a country, we haven’t had a budget surplus since 2001. If the government abandons austerity, then we could all lose in the medium to long-term.

Instead, Theresa May should look to follow through her free trade vision at home as well as abroad. Opening the economy to private investment creates an economy full of choice, opportunity and more freedom for people to achieve their goals – attracting investment, growth and rising incomes.

So, let’s hope the government takes a light hand approach to the domestic economy and allows for the good news to continue. This, along with a global Britain orientation, will help mean both the UK and its people can become free again.

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