When fear fails

Economies run on confidence — as Franklin D. Roosevelt observed when he told Americans, in his first inaugural address during the depths of the Great Depression in 1933, that they had ‘nothing to fear except fear itself’. If that confidence is lost, if people collectively start drawing in their horns, squirrelling money away because they fear turbulent economic times ahead, then recession can all too easily become a self-fulfilling prophecy. No serious economist would dispute this theory. The puzzle is why the UK economy, riddled with Brexit anxieties, is in such good health.

The Dutch prime minister said we were ‘collapsed’. The New York Times publishes frequent reports saying that Britain is falling apart, even that our country has ‘vanished’. Yet employers, consumers and workers do not seem to have received the message. Last month, it emerged that the government recorded its strongest surplus since 2000, collecting £2 billion more than it spent.