The economy is in good shape, according to the Economic and Social Research institute in its latest quarterly report published yesterday. That is, by now, a fairly routine finding after a succession of expansionary years, accompanied by low inflation and low interest rates, which have been remarkable at a time of stagnation in most of the other member states of the European Union. There is also, according to the ESRI, every likelihood that the good years will continue, with 6 per cent growth expected this year and 5 per cent in 1997 - still double the EU average.
Things are good for consumers too. For the firsts time in several years there has been a surge of buying and a falling off in savings, proof that people with jobs are getting more confident about the future and now want to have something to show for their money. This sense of well being is not equally shared. An increase of about 20 per cent in personal disposable incomes is forecast for the three years 1995 to 1997, but farmers have lost out as a result of the BSE crisis and the steady decrease in milk earnings this year.
The ESRI estimates that there has been a permanent loss to the economy of about £150 million already because of the drop in the value of beef exports. What the lasting impact of BSE will be for agriculture and farm incomes is, of course, impossible to predict, but the forecast for 1997 is a further decline, though with hopes of some stabilisation. As the report points out, however, it has been a long time since agriculture was the mainstay of prosperity and what is a disaster for farmers has not stopped the onward economic march the drop in agricultural exports takes place in a year when the value of visible exports as a whole is expected to rise by more than 11 per cent.
There is a danger that the almost uniformly positive figures will give rise to complacency. Exports up industrial production up massively, to use the ESRI's own terminology, substantial increases in manufacturing and building jobs, the steady decrease in the numbers out of work continuing (though with that suspicious quirk in the Live Register) all contribute to a picture of health and dynamism and a reasonably widespread raising of boats. The message of the ESRI's report is that, praiseworthy though these achievements may be, they are nothing less than what is necessary in the context of Europe's next and decisive step towards union. There are many external uncertainties, and the only prudent course for the Government is to ensure that the Maastricht criteria for EMU are attained with room to spare.
One important factor has been the success of the Programme for Competitiveness and Work in keeping earnings within agreed limits. The tendency, according to, the ESRI, is likely to continue in 1997, "with or without a renewal of the PCW, because of the constraints of a strong currency. This assumes, however, that both employers and workers will be equally committed to a rational and flexible approach to income development in the longer term.