Those with long enough memories may recall that Viv Nicholson won what was then a small fortune on the football pools in 1961. Asked what she was going to do with the money, she replied: “Spend, spend, spend.” Which she duly did until there was nothing left.
The latest official retail sales figures show that the spirit of Viv Nicholson lives on among Britain’s shoppers. Moreover, the spend, spend, spend mentality will be what prevents the economy from sliding into recession, at least for now.
To be sure, there were a couple of special factors that explain why spending, after a bumper June, was again solid in July. It was the time summer made a brief appearance and there were some juicy online deals that consumers could not resist.
That said, though, there are also underlying reasons why spending is holding up. Employment is at record levels, unemployment is close to its lowest level since the mid-1970s and wages are growing faster than prices. When people are in work and their real incomes are rising, they tend to spend more.
So how does this square with the idea that the economy, after shrinking by 0.2% in the second quarter, will contract again in the third and so fulfil the technical definition of a recession?
The simple answer is that it doesn’t. Businesses are certainly full of anxiety about the terms on which the UK leaves the EU, which is why investment is so weak. But the evidence suggests that consumers are not spending every waking hour fretting about Brexit. And that means the economy is likely to grow modestly in the third quarter.
That’s not to say that retail sales – which account for about 30% of total consumer spending – will be unaffected if Britain leaves on 31 October without a deal. In those circumstances there would probably be a wave of stockpiling in the lead-up to Brexit day followed by a period of retrenchment.
If – and it is a big if – the chaos is less severe or less prolonged than expected, consumer spending may quickly bounce back, particularly since tax cuts, public spending increases and lower interest rates would all help support the economy.
But clearly a no-deal Brexit increases the chances of the economy contracting in the fourth quarter. And, given that November and December are the busiest time of the year for retailers, it is easy to see why they await 31 October with some trepidation.
Preferred bidder for British Steel should be a no-brainer
Imagine for a moment you are the business secretary, Andrea Leadsom, faced with the job of choosing a white knight to rescue British Steel and safeguard the future of its Scunthorpe works.
On the table are two offers from which you have to pick a preferred bidder. One is from Oyak, a Turkish pension fund, which says it can keep the company going by investing £900mn to double output and provide it with critical mass.
The other is from Liberty House, a UK-based steel company that says its plan is to convert one of the blast furnaces at Scunthorpe so that it makes steel in a less energy-intensive and less polluting way.
It seems easy, doesn’t it? The first of these options involves business as usual. It means that the company remains at the mercy of gyrating energy prices and of low-cost producers flooding the market with cheap steel. The second of the options would allow British Steel to be more forward-looking when there is pressure on the steel industry to do its bit in the fight against climate change.
In all the circumstances, the decision might look like a no-brainer. After all, the government is committed to a long-term industrial strategy and, by 2050, a zero-carbon economy. Yet it is gearing up to make Oyak the preferred bidder.
That decision, of course, has nothing whatsoever to do with the fact that the Liberty House plan involves 400 more job losses than the Oyak proposal, that Scunthorpe is a marginal with a Labour majority of less than 3,500 and that ministers are preparing for a snap general election within the next few months. Perish the thought.