The crowds gathered all day in Trafalgar Square, fuelled by alcohol and relief. People were crushed together and yet, for once, no one was complaining. Cheers spread through the throng as another piece of good news filtered through. Young lovers coupled up, swept away on a wave of giddy optimism. It was tell-your-grandchildren stuff, being there on VE (Victory in Economy) Day.
Of course, none of this happened. Trafalgar Square remained largely populated by pigeons and tourists. But the giddy talk of an economic turnaround over the past few weeks has certainly had a demob-happy ring to it. And with news earlier this month of growth in the Eurozone, too, the liberation of Europe is surely complete, it would seem.
It’s true that the second-quarter figures for UK GDP growth were better than expected, with initial estimates for growth for the months of April to June revised upwards to 0.7 per cent in figures released on Friday. Forecasts for the year as a whole have been tweaked upwards, too. The chancellor of the exchequer, George Osborne, declared that the patient was ‘out of intensive care’: ‘Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend, but there is still a long way to go and I know things are still tough for families.’
Other recent data suggests that UK exports are up and the trade deficit is down, while unemployment - stuck at around 2.5million - has not shot up to the high rates of the Eighties. Last Wednesday, news came of positive feedback from a survey by the Confederation of British Industry (CBI), showing manufacturers enjoying their best spell for two years. Nor is the good news confined to Britain: the Eurozone grew by 0.3 per cent in the second quarter.
The celebratory tone around this wave of news is more a measure of the depths to which the economy has plunged than of genuine vibrancy. UK GDP grew by a mere 0.2 per cent in 2012. Taking into account the growing population, GDP is still five to six per cent below its peak value in 2008. The relatively healthy headline unemployment figures hide a lot of people scratching around in part-time work, either as employees or self-employed, who would like to get more hours of work. So even if the economy grows, the rate of joblessness is likely to stay high for a while, as underemployed workers gain more hours rather than employees being taken on. When the new Bank of England governor, Mark Carney, announced ‘forward guidance’ on interest rates, saying they would not rise till the unemployment rate fell from the current 7.8 per cent to below seven per cent, analysts suggested that this might mean record-low rates continue to 2016.