Nowadays, there are hazards to looking for signs of hope in the British economy. As the latest OECD forecast for 2018 and beyond shows, a cloud of gloom has descended on the United Kingdom. The primary source of pessimism is, of course, Brexit, and the fear that withdrawing from the European Union will hurt British consumers through higher import prices and weak business investment. And, making matters worse, the British government’s independent Office of Budget Responsibility has now lowered its expectations for economic growth, owing to persistently weak productivity performance in the UK. Against this economic backdrop, British politics are in a state of chaos, with Prime Minister Theresa May seemingly presiding over an increasingly weak government. At this point, the only thing stopping a Conservative Party putsch against May is the fear of losing a fresh election, which would bring a far-left government to power for the first time in many years. Meanwhile, the rest of the world economy appears to be strengthening, and indicators that I consider to be reliable have been accelerating as we approach 2018. One area that is particularly relevant to the UK is the eurozone, where the manufacturing Purchasing Managers’ Index (PMI) rose above 60 in November – its highest level since 2000. Despite the UK’s best attempts to declare economic independence, its fortunes will continue to depend more on its closest geographic neighbours than on any other country or region. Elsewhere, almost all of the ten largest economies’ performance has been strengthening in recent months. In the US, that was true even before Congress started writing corporate-tax-cut legislation, which now seems likely to be enacted. So, where does this leave the UK? It may come as a surprise to hear that the UK’s own PMI is now at its highest level in four years, suggesting that businesses are becoming more willing to make new investments. If official data in the coming months support this finding, it will represent a significant positive development indeed. Moreover, there are some early signs of improvement outside of London and the southeast, which is particularly relevant for some of the UK’s most deep-seated economic weaknesses. As of October, monthly regional PMIs, which lag one month behind the national PMI, show a persistent positive trend that economic observers and policymakers will need to reckon with if it continues. It has been a number of months since London was the UK’s top-performing region. In October, that honour belonged to Wales. And, just within England, parts of the so-called northern powerhouse have been outperforming London throughout 2017. The northwest PMI is at its highest level in months, and indicates a stronger absolute performance than that of London. Even more heartening, Yorkshire and the northeast are also showing signs of renewed strength. Whether this newfound economic vigour will prove sustainable remains to be seen. But, for now, it is a highly welcome development, and may indicate that policies aimed at boosting the northern economy have had some effect. Moreover, PMIs are not the only evidence of improving conditions in the north. Employment is increasing in some of these areas, notably the northwest. And weaknesses in the London housing market do not appear to have spread elsewhere. In fact, in the northwest, residential real-estate prices are showing signs of accelerating upward. If this trend does endure, it would have far-reaching implications for the UK economy. Strengthening housing markets in the north could do wonders to reverse the disturbing regional inequalities that have emerged in recent decades. The government should be pursuing further initiatives to boost education and skills-training in the north, while also devolving more decision-making authority to regional and local governments. Greater Manchester is at the geographic heart of the northern powerhouse, and its leaders have been spearheading the push for greater devolution of authority. It cannot be a mere coincidence that the area is enjoying a stronger economy. Britain needs more such efforts. In 2018, there will continue to be plenty of drama surrounding Brexit and the future of the May government. But, regardless of whether Britain manages to forge a productive new relationship with the EU, at least it has started to address longstanding challenges that have held too many regions back for too long. Given that those problems are of the UK’s own making, policymakers, in this case, are right to look for solutions from within. Published in Daily Times, December 11th 2017.