You can take a gloomy view of that, Smith argued, which is that the Bank is raising rates even against a backdrop of slow growth, because the absence of productivity growth means the economy’s speed limit has come down. In other words, it does not take much growth to generate inflationary pressure.
But there is also a more optimistic view, which is that the Bank wouldn’t even be thinking of raising rates if it thought the economy was too weak to take it. And most would agree that you cannot go on for ever with near zero interest rates.
There is also good news on Brexit. Though there will be negotiating challenges in the coming months, we are doing what the British do best, which is muddling through. Theresa May is taking a sensible approach to Brexit, skilfully herding the headbangers in her party away from extreme outcomes. So, there will be no walking away without a deal on WTO (World Trade Organisation) terms. There will be continued close economic co-operation with the EU, probably including a version of the customs union. And there will be a lengthy transition deal, to avoid a cliff-edge exit. I have always thought that the prime minister would aim for something as close to EU membership as possible, but without the pressure for political integration, and that is what she is doing.
So, is it al plain sailing? No, Jeremy Corbyn, despite the row over antisemitism, despite Syria, despite the Russian nerve agent, should be struggling. But there was net support for Labour in every age group up to 47 in last year’s election. And, talking to Corbyn supporters, you get the sense that none of this matters. The next election could be uncomfortably close, and the election of an anti-business Labour government remains a possibility. A Corbyn government still looks unlikely. But then so did the election of Donald Trump as US president in 2016.