RARELY IS everything in the macro economy quite as rosy as the party of government likes to paint it. While Harold Macmillan was telling Britons in the 1950s that they had never had it so good, the UK was overtaken in per capita GDP by one European country after another. And as this week's Pre-Budget Report made plain, we still have some way to go before we catch up again.
Even so, it is surely safe to reflect on the unusually benign set of economic circumstances Britain is enjoying right now. The Bank of England's Inflation Report yesterday backed up Gordon Brown's forecast of steady growth and coupled this with a prediction that inflation would stay low. There is even a higher than one in three chance that the Governor will have to write to the Chancellor explaining why inflation is below 1.5 per cent.
One reason for this happy state of affairs is greater competition within the economy. The Monetary Policy Committee has had a stab at estimating this "Wal-Mart" effect. Intensifying competition will take 0.2 per cent off the underlying inflation rate in each of the next two years, it reckons. Combine the competition effect with a macro-economic policy framework geared to stability, the effects of new technology, and changes in the structure of the jobs market, and there are good grounds for believing this favourable outlook might persist for much longer than has been usual in the past. All Chancellors dream of the economic nirvana where growth persistently outstrips inflation. Gordon "Lucky" Brown seems to stand a more than reasonable chance of achieving it.