Last Wednesday, Britain got some bad news when we found out that we had slipped into a double-dip recession.
Thanks to our economy shrinking by 0.2% in the first three months of this year and by 0.3% in the last quarter of 2011, the UK’s GDP (gross domestic product, or national output) is no bigger now than it was a year ago. In fact, the UK economy is no bigger today than it was in early 2008, so we’ve had zero growth for four years.
Cheer up, it’s not that bad
After last week’s dose of doom and gloom, I’ve been looking around for reasons for Brits to feel happier. After all, things could be a lot worse – as the deep recession of 2008/09 proved.
Therefore, here are six reasons I’ve found to stay cheerful, grin and bear it…
1. High employment
While lots of column inches are dedicated to worrying over the unemployment rate (8.3%, since you ask), there’s very little mention of how strong employment is.
Despite our weak economy, the number of people in work has remained consistently high. In fact, with 29.2 million people working in the UK today, more than seven in ten people of working age (70.4%) are bringing home the bacon. In the US, this employment rate is just 63.8%, so we’re doing much better than our transatlantic cousins in this respect.
2. Falling inflation
Inflation is a backwards-looking measure of the rising cost of living. For example, a yearly inflation rate of 5% means that a basket of goods costing £100 a year ago would cost £105 now. Thus, when inflation is high, it quickly erodes the spending power of our cash and savings.
Thankfully, the official measure of inflation – the Consumer Prices Index (CPI) – is coming down. Last September, CPI inflation surged to 5.2%, which was its highest level since March 1992. Since then, inflation has been coming down and hit 3.5% in March. Although this is still well above the Bank of England’s CPI target of 2%, it’s still a step in the right direction.
3. Improving exports
One big problem for Britain is that more than half (53%) of our total exports go to European countries. With the euro zone hampered by slow growth and high levels of sovereign debt, these are tough times for British importers.
Nevertheless, many companies are sending more and more British goods abroad, because British exports have been hitting record highs. Last August, total monthly exports of goods and services hit £31.4 billion – the highest level since records began.
What’s more, some British brands are doing brilliantly. For example, exports of Scotch whisky hit a record £4.2 billion in 2011, up nearly a quarter (23%) on 2011, according to the Scotch Whisky Association.
4. Low mortgage rates
Of the UK’s 26 million households, over two-thirds (67%) are owner-occupied. Of these, about 11.5 million homes are being bought with a mortgage. Therefore, when mortgage rates come down, millions of households benefit from lower monthly repayments.
The good news is that the fixed rates and variable rates charged by lenders have come down sharply in recent years. This is largely because the Bank of England has kept its base rate at a record low of 0.5% a year since March 2009.
For example, in the past two years, the average rate for a five-year fix has dropped from nearly 5.87% in April 2010 to 4.86% today. That’s a fall of around 1%, which is a saving of £125 a month on a £150,000, interest-only mortgage.
5. Higher savings rates
Between 2008 and 2010, savings rates plummeted as the Bank of England rapidly reduced its base rate from 5% to 0.5%. This put huge pressure on people who rely on savings interest to supplement their income, particularly pensioners.
However, banks and building societies are now being forced to raise their savings rates in order to attract new deposits. The average before-tax rate paid by a notice savings account now stands at 1.57%, which is the highest level for three years. This average rate stood at just 1% in April 2012, so savers can look forward to banking a bit more interest nowadays.
6. Culture vultures
Of course, there’s a lot more to life than money and, in this respect, Britain has so much to enjoy.
For example, we have some of the loveliest countryside in Europe, as well as countless art galleries, museums and cathedrals offering free or low-cost entrance. Our modern heritage – notably our top football teams – is widely admired worldwide, as are our history, traditions and ancient attractions.
In addition, the UK produces some of the most creative and cultured people on Earth. Though the UK accounts for a mere 62 million of the seven billion people on the planet, British actors, artists and musicians have huge followings across the world. Right now, British acts such as Adele, One Direction and The Wanted are taking the US charts by storm.
In summary, although things look shakier on the financial front, Britain has much to be proud of and grateful for, so let’s not get too miserable.
Finally, there’s also an extra Bank Holiday this year, to celebrate the Queen’s Diamond Jubilee on Tuesday, 5 June. Yippee!