It did not take genius to predict that the UK GDP figures just published would be poor. As I have been blogging over the last few weeks, all the signs were there.
And they are poor: growth has fallen to 0.3% in the quarter whilst the year on year trend falls below expectation. If you take GDP as a sign of virility (and the government, at least, does) then this is a bad sign, especially as there is little or no prospect of things getting better this quarter because of an election.
Whether that then gives rise to a summer bounce depends largely on what the EU demands of the UK immediately thereafter as Brexit negotiations really get going. My suspicion is that nothing they say will lift UK spirits and that as a result this downturn is not a blip but part of a trend. And that's bad news and the clearest indication yet of the self-inflicted wound that Theresa May wants to contaminate with a large majority.
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‘depends largely on what the EU demands of the UK immediately thereafter’
It largely depends on whether the Government is willing to defect spend, given private debt and an external deficit. There is no alternative other than decades of stagnation or a climate change disaster that forces the issue in which case deficit spending will miraculously happen!
Things will drip on probably because about 30% of the populace have assets and their tunnel vision will ‘guide’ things. The rest of the populace can sweat out the debt peonage and those on benefits used as a perpetual spitoon for public dissatisfaction.
Until the economic paradigm shifts nowt will change and the rentiers love this stasis. There is zero sign that there will be any paradigm shift, on the country, with May’s rating approval at over 60% it appears that all you need to do is sing Rule britannia and everything feels ok just as the EU sings ‘All people become brothers,*
Where your gentle wing abides.’
What’s our latest per capita GDP ranking? Aggregate GDP is pretty meaningless, isn’t it? Simon sums the situation up prccisely. Until ‘new economics’ prevail (don’t hold your breath) it will simply be more of the same. It’s the old salami slicing analogy. People don’t notice the gradual decline until their piece of the national salami has suddenly disappeared!
Slightly different topic, before I forget. There doesn’t seem to be much up-front demand for PR from the progressives. In view of the growing hegemony of the Tories, you’d think it would be right at the top of the agenda, wouldn’t you? With inevitably disasterous results in the GE coupled with forthcoming boundary changes maybe even the LP will finally admit to its virtues. I wonder how popular it might be with the electorate.
Corbyn is not interested in PR. Greens and i am sure LibDems have pressed him on this. I think Labour think like this because it’s like an abusive relationship. They have been fighting each other for so long they just can’t cope with it ending. A bloody nose on a regular basis gives them a sense of identity. Makes them feel manly and in a real fight people get hurt.
Two more declines like that and we’ll be in recession.
is this GDP figure corrected for inflation?
if so.. is the current method for calculating inflation honest?
John Williams of ShadowStats calculates American stats using more traditional formulas giving a picture that is a lot more credible than the USG’s claims,
http://www.shadowstats.com/alternate_data/gross-domestic-product-charts
does anyone revise British stats in a similar manner?
I know Dr Tim Morgan is generating data including the deteriorating returns on the energy costs of fossil fuel extraction,
https://surplusenergyeconomics.wordpress.com/2017/03/27/91-seeds-goes-live/
I’m inclined to see western economies as being either dead horse races or dead cat bouncing contests,
apart from those esconced in the ivory towers my gut feeling is that the rest of us are going backwards and the speed is starting to increase,
I know this isn’t going to be a popular comment but June 2017 looks, to m, like a very good election to lose.
Trump’s design seems to be to blow into a US bubble until it DAMN WELL BURSTS!
You can imagine Ms Yelland’s response.
At the same time the UK will be forced to undresstand that all tat stuffaboutthe UK having to pay in wasn’t joking! It was serious!
I can’t imagine why Corbyn, or any other Labour leader, would want to buy into this particular disaster waiting to happen
Mervyn King said that of 2010
He was wrong
It can’t last forever:
‘An increase in private debt relative to income can go on for a long time, but it cannot go on forever. (Wynne Godley 2000).
‘At some point lenders will run out of credit worthy borrowers who are willing to spend.’ (Stephanie Kelton)
So this sort of situation can go on for some time and probably will, it will be a secular stagnation with the unemployed and disabled blamed for ‘dragging the country down’ as 12 billion a year is cut. The ‘alright-jackists’ will strut their stuff and Richard and others on this site will carry on at various levels trying to fight the nonsesne. But, as Godley said, it won’t go on forever – although I think that Ann Pettifor wrote somewhere (‘Just Money’?) that bail-outs could be baked into the structure of the system so that when things fail the central bank buys the toxic assets and the next cysle continues, in which case it still won’t be forever but a bloody long time!
‘World growth will slow to 2.7%, says the Paris-based thinktank [OECD], because the catch-up effects boosting growth in the developing world — population growth, education, urbanisation — will peter out. Even before that happens, near-stagnation in advanced economies means a long-term global average over the next 50 years of just 3% growth, which is low. The growth of high-skilled jobs and the automation of medium-skilled jobs means, on the central projection, that inequality will rise by 30%. By 2060 countries such as Sweden will have levels of inequality currently seen in the USA: think Gary, Indiana, in the suburbs of Stockholm.’ (Paul Mason 2014).
Everything really is up in the air at the moment. In our Portishead accountant office we have many clients who are rightly worried for the future of their businesses.