It was the promise that kept on giving. Or at least, the one that kept being deferred. Now, a decade after the referendum that tore through the Westminster village like a wrecking ball, the so-called 'Brexit dividend' has finally shown its face. The latest PMI data reveals UK services growth is outpacing the eurozone by the widest margin since the vote. The City is buzzing. Whitehall is quietly smug. But the real question: is this a blip or the beginning of a new chapter?
Let's be clear. The services sector is the engine room of the British economy. For years, the Remain camp warned that leaving the single market would cripple it. Instead, flexibility on regulation and a nimble approach to trade deals have allowed London to steal a march on Paris and Berlin. 'We are seeing the benefits of being outside the EU's bureaucratic straightjacket,' a senior Treasury source told me, off the record, over a scotch in a St James's club.
But politics is never that simple. Shadow ministers are already sharpening their knives, pointing to stagnant manufacturing and the ongoing cost-of-living crisis. 'Services growth is great for bankers in Canary Wharf, but what about the factory worker in Sunderland?' one Labour frontbencher grumbled. The PM's team, however, is keen to weaponise the data. 'This is the vindication we've been waiting for,' a No 10 aide texted me, the message laced with glee.
The numbers do not lie. According to the S&P Global/CIPS UK Services PMI, the index hit 54.3 in May, well above the 50 mark that separates growth from contraction. Compare that with the eurozone's 52.2. The gap is the widest since the 2016 vote. These are the kind of figures that get Tory backbenchers purring and Labour strategists sweating.
But here is the rub. The recovery is not evenly distributed. It is being driven by financial services, tech, and professional services anchored in the South East. The much-vaunted 'levelling up' agenda remains more slogan than substance. 'The Brexit dividend is a London dividend,' a northern MP told me, his voice dripping with frustration.
And there is the spectre of inflation. Strong services growth usually means higher prices. The Bank of England will be watching this data like a hawk. Rate cuts might be off the table if the economy is overheating. That would be a blow to the mortgage-holding voters the Tories desperately need to win back.
Still, for a government battered by scandals and double-digit poll deficits, this is a rare piece of good news. The narrative is shifting. From 'Brexit is a disaster' to 'Brexit is working.' It is a dangerous game for Labour, which has been tiptoeing around the issue. 'We are not proposing to rejoin the single market,' Keir Starmer has said, but his party remains divided.
In the end, the data is a snapshot, not a movie. One month does not make a trend. But for a Prime Minister fighting for his political life, it is a lifeline. For the rest of us, it is a reminder that in politics, the dividends are never paid on schedule. They arrive when you least expect them, and they come with their own set of complications.
