Reasons to be cheerful about Britain's economy

For all the noise about Brexit, Britain's economy is very resilient, with good GDP growth; unemployment at its lowest for 44 years; and retail sales up more than 5% year-on-year.


UK economy: more reasons to be cheerful than expected
(Image credit: Credit: James Davies / Alamy Stock Photo)

Given the way it is disrupting our politics, you would think that Brexit is just about the only thing that matters to the UK. Not so.

In this week's magazine, Matthew Lynn looks at some of the other (rather more important) things that the brave (or perhaps foolish) person who becomes the next prime minister needs to concentrate on. As far as he is concerned, our trading relationship with Europe comes pretty low down the list.

John Stepek agrees that Brexit doesn't much matter. Note that for all the sound and fury, the UK is still seeing rather better GDP growth than most of the other EU countries. At the same time, unemployment is at its lowest for 44 years (3.8%) and retail sales are up more than 5% year-on-year. This is a very resilient economy.

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The biggest threat from Brexit

What can you do? John has a good look at the options available in this week's cover story. We would not, however, recommend abandoning the UK stockmarket as a whole. Far from it. Good value high-quality stocks are hard to find these days, but the UK is jammed with them Troy's Hugo Ure suggests a few in this week's magazine. The pound is also very cheap discounting pretty much every risk out there. If Brexit goes better from here, and the Corbyn threat retreats, it will be become clear, as Hamish McRae puts it in the Daily Mail, that "on a long view UK assets must be bargain basement".

If you are a less value-oriented investor you might turn to my interview with Walter Price. Price is a huge believer in the US technology sector. We might carp about the valuations of the likes of Uber, Lyft and Tesla (now increasingly being seen as a heavily-indebted car company with production issues, rather than a super-duper tech firm), but he reckons that if we look among the mid-caps and concentrate on the less whizzy-sounding areas of technology that are gradually transforming corporate behaviour (and costs), as well as our day-to-day lives, there is huge value in the technology sector.

Most investors think this round of the great tech boom is coming to an end. Price thinks it is just beginning and that we should all be heavily invested for the next 20 years. The growth will, he says, more than justify today's prices (the average price/earnings ratio in his portfolio is a lot more than 30 times).

Finally, if that's not punchy enough for you, we look at Facebook's cryptocurrency launch. Is it time that us old-timers at MoneyWeek gave in and accepted that crypto is the future? For the answer to that (hint: John and I aren't quite there yet) listen to our latest podcast.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.