This is a summary from the ONS of the quarterly GDP data for the UK to December 2018:
It could be that the UK is heading the world into a downturn: it's happened before.
It could be Brexit, which is what most commentators outside the UK think.
What it is not is good for the conventional view of the economy.
And who it is also not good for is those Brexiteers who said that those who suggested Brexit would cause a downturn were wrong. We've now got to the point where that prediction can be tested. And those who made it, me included, are being proved right.
No surprise there then. It was glaringly obvious.
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No surprise Richard to anyone with a few functioning brain cells, that’s for sure. Which, from what I can see, doesn’t include Brexiters or a large proportion of those who voted to leave the EU.
Anyhow, is there any point in listening to anything any of the anti-EU fanatics say?
You don’t think it’s the neoliberal solution to climate change then…? Shut down the country to reduce consumption, manufacturing and all other economic activity. If we all stay at home and dig for victory we’ll not need so much central heating fuel, won’t need our cars to commute…… we’ll be healthier and happier like the good old days. Obesity will become a thing of the past and we’ll no longer even need a national health service.
Brexit always had that whiff of wartime nostalgia to it …….. all those little boats batting across the Channel to bring back crucial supplies of wine and avocados…. Such fun we’ll have. 🙁
🙂
Just out of interest since I know you have a dim view of my homeland, it was the Isle of Man Steam Packet Company ships that raced round to Dunkirk and evacuated almost 25,000 of the British Expeditionary Force in 1940, losing four of their ships in the process. This time round I suspect Brexit will leave the island in the lurch. Personally I think they should just declare independence and then manage without rUK. Scotland and Northern Ireland will be gone soon anyway. 🙂
What a load of absolute jingoistic nonsense
What has Dunkirk to do with Brexit?
I think you read that too quickly and you need to read my comment as a response to Andy Crow who was talking about Brexit having a whiff of the Dunkirk / WWII spam and baked beans England alone against the World spirit about it. Which it does, incidentally, and I don’t think it a coincidence that we have had the Dad’s Army film, the Churchill film and the Dunkirk film (which lavished all the attention on the ‘Little Ships’ and totally omitted the IOM Steam Packet) all in the last couple of years.
I certainly do not support the demented Brexiteers, all the Empire 2.0 nonsense, etc. In fact I joined the SNP in 1988 long before it was fashionable.
Apologies then!
If it was all down to Brexit, why is growth in the EU so slow, and for the whole Euro area exactly the same level as the UK? There is a good chance Germany and Italy are already in recession.
And why then is growth in the rest of the world faltering as well? Could it just be that slower UK growth is just down to global headwinds, including higher US rates, trade war concerns, slower Chinese growth and various other things? Let alone that UK GDP growth is suffering because of the EU slowdown, rather than the other way around.
Pinning it all on Brexit in isolation makes you sound like you only really have one agenda – a remainer one. It’s not like the EU, Eurozone and the Euro itself have been anything other than a huge disaster for many of it’s members.
Your claim is not true
We are not quite the slowest growth in the EU but are very near it
Making stuff up does not help your argument
Uncertainty is invariably the enemy of steady growth – in whatever form it manifests itself. And the ‘Brexit’ fiasco has generated unprecedented peace-time uncertainty.
Of course, GDP is just one metric and clearly not the best indicator of a nation’s general ‘well-being’, but it’s the one used to determine global comparative performance; (if the media focused on per capita GDP it would give a more accurate picture of where the UK sits – currently around 26th (PPP) I believe, depending on which source). Factoring the environment into economic data is still in its infancy and should now be a priority. According to the 2018 EPI the UK scores well coming in at 6th but I don’t think there’s any direct correlation with economic performance. I haven’t undertaken any intensive investigation to see what the latest ‘state-of-the-art’ is. Maybe others will know.
However, my main point is that the continuing analysis of a ‘Brexit effect’ just further reinforces the underlying mythology of the whole wretched event that has been so woefully – and successfully – injected into the nation’s blood-stream. For me, the person who seems to understand most clearly what it’s really about is Fintan O’Toole. I’ve not yet read his book “Heroic Failure: Brexit and the Politics of Pain” but there are many excellent summaries, such as this in the current issue of the New York Review of Books: ‘Fool Britannia’ https://www.nybooks.com/articles/2019/02/21/brexit-fool-britannia. For those who want to hear it direct from the horse’s mouth, he recently delivered the first Jean Monnet Lecture for 2019 at University College Cork – https://www.youtube.com/watch?v=vdBRm3UGP9w. He’s a better journalist than public speaker but what he says is edifying.
Apologies for meandering from your original post but I think there is a correlation. Understandably ‘Brexit’ is being dissected & analysed every-which-way. And rightly so. But in so doing it plays inoto the hands of the dishonest Brexiteer politicians by reinforcing the legitimacy of the project – the underlying drivers of which have more to do with the ‘English problem’ than with our membership of the EU. Does that make any kind of sense?
Barista – un caffè Americano per favore. And for anyone who agrees – lol 🙂
Thanks
Make it two…
OK some statistics for 2018:
UK: Annual 1.2% Q4 0.2%
Germany: Annual 1.1% Q4 -0.2%
France: Annual 0.9% Q4 0.3%
Italy: Annual 0.1% Q4 -0.2%
Euro Area: Annual 1.2% Q4 0.2%
Whole EU: Annual 1.5% Q4 0.3%
So of the major EU economies we are actually the fastest growing….some of the smaller EU countries are growing faster but from a much lower base, which is not that surprising.
As a whole the UK is growing at EXACTLY the same pace as the Euro area countries, and faster than the largest ones.
I suppose you will now accuse me of making up the data. Which is from Eurostat.
I think the point remains though. The UK may be slowing down, but Brexit is probably not the main or only reason, which you are making out that it is. The EU is already well into a slowdown, and it is just if not more likely that the UK is slowing down because of that and other issues, rather than the other way around. And certainly it is impossible to pin the slowdown solely on Brexit.
I also asked, if the EU is so great, why has it been such an economic and social disaster for so many of it’s members? Huge unemployment, especially youth, in Greece, Italy, Spain and various others. Even in France unemployment is near 10%. The Euro and the EU have been a disaster for the continent – why should we want to remain in it?
Based on data published last week we have the third slowest expected growth rate: that was the basis for my comment
And yes, Brexit is the reason for the fall – which is more rapid than even the BoE thought it would be last week. It has spillover effects for others too
And as for your comment on the failings – you think the EU has been a disaster for its members? Really? The euro may well have been. The EU is entirely different. And that’s just nonsense. Why not try to get things right, again? As I did last time
So when world economy was doing well i don’t remember many brexit supporters claiming that was the reason for good growth figures just childishly pointing out project fear was so wrong.Now its not looking so good its other factors on hand to blame.
@ Thomas,
Have you read this information from that well-known mouthpiece of Socialist and “Remainer” rhetoric, Small Business Prices”?
https://smallbusinessprices.co.uk/brexit-index/?fbclid=IwAR14WAQYhL9B3C7J7CzRr-U5OZx0XNGy_xIszdbhU15nxgdUdWFuOgogIFY
Thanks Andrew
Very interesting link Andrew – thanx.
Thom,
That was tedious. It was the month-by-month breakdown that was relevant in the figures that R. Murphy cited above. All that you did was add to the quarterly figures that we had already seen.
At last the UK has found some way to provide ” quality ” leadership to the world.
(and yes I am Jeni’s husband)
https://ec.europa.eu/info/sites/info/files/economy-finance/ip096_en.pdf
This report is seeing us growing at the same rate as France, Belgium, Sweden and the eurozone as a whole and ahead of Germany and Italy…I am not saying you might not be eventually proved correct but your statement is not true.
And many states are ahead of us
I accept others are not
So Brexit has spillovers….
Spreadsheet Phil seems to think it is all going OK. A proponent of urinating down one’s back whilst reporting precipitation.
Just to correct some false statements:
Greece, Italy and Spain have had their economic problems already when entering the EU, like others. The EU or the Euro have nothing to do with that.
The same applies to France.
The economy of Germany suffers due to commercial slowdown in China, the trade war between US and China as well as to some extend to brexit. The EU and/or the Euro have no impact at all.
Oh, the euro ‘has no impact at all” because you say so.
You total waste of time.
The economy of Germany suffers due to the idiotic policies pursued by the still rather right wing austerity government of Angela. The previous Finance Minister wanted to pay off the entire National Debt (Schauble) for no good reason other than Germans hate ‘debt’. In fact the interest rate on 10 year Bunds was negative so he could actually have made a profit by borrowing more … So they are running a huge surplus in the middle of a recession which is exporting deflation onto the rest of the Eurozone. What is needed is a bid spending increase in Germany coupled with e.g. a cut in the VAT rate from 19% to e.g. 15%. The Germans need to buy more from the rest of the Eurozone and have a lot more Med holidays! Now why is that so hard? If the German Government got its way and did pay off the National Debt, then as we know from MMT the double entry book-keeping means that also means wiping out the National Savings. So as the Germans are compulsive savers then the more the state imposes negative rates and repays debts, the more the public will try to repair the damage by saving even more. Not very clever!
And speaking of the glaringly obvious, we we will all need a pair of ‘Brex-Ray Specs’ to keep out the glare:
Please click link below:
https://www.reddit.com/r/brexit/comments/anu3sh/brexray_specs_courtesy_of_private_eye/
🙂
Not very relevant to your article Richard, apart from maybe, at a stretch, a look at an alternative to the ‘conventional view of the economy’ – someone posted this link claiming it to be early MMT – in 1913. It is a very long article and so I have barely skimmed it, but it seems almost fascinating, as the author uses historical references from 3000BC on credit/debt to support his arguments. I am not sure about any link to MMT, but the author certainly had strong views on gold standard economics and the hope we’d come to our senses soon. (Tax is mentioned too) Link, and a couple of extracts:
http://moslereconomics.com/mandatory-readings/what-is-money/
What is Money?
From The Banking Law Journal, May 1913.
By A. Mitchell Innes.
(Extracts)
“Now if it is true that coins had no stable value, that for centuries at a time there was no gold or silver coinage, but only coins of base metal of various alloys, that changes in the coinage did not affect prices, that the coinage never played any considerable part in commerce, that the monetary unit was distinct from the coinage and that the price of gold and silver fluctuated constantly in terms of that unit (and these propositions are so abundantly proved by historical evidence that there is no doubt of their truth), then it is clear that the precious metals could not have been a standard of value nor could they have been the medium of exchange. That is to say that the theory that a sale is the exchange of a commodity for a definite weight of a universally acceptable metal will not bear investigation, and ive must seek for another explanation of the nature of a sale and purchase and of the nature of money, which undoubtedly is the thing for which the commodities are exchange”
And concluding
“The governments of the world have, in fact, conspired together to make a corner in gold and to hold it up at a prohibitive price, to the great profit of the mine owners and the loss of the rest of mankind. The result of this policy is that billions of dollar’s worth of gold are stored in the vaults of banks and treasuries, from the recesses of which they will never emerge, till a more rational policy is adopted. Limitations of space compel me to close this article here, and prevent the consideration of many interesting questions to which the credit theory of money gives rise; the most important of which, perhaps, is the intimate relation between existing currency systems and the rise of prices.
Future ages will laugh at their forefathers of the nineteenth and twentieth centuries, who gravely bought gold to imprison in dungeons in the belief that they were thereby obeying a high economic law and increasing the wealth and prosperity of the world.
A strange delusion, my masters, for a generation which prides itself on its knowledge of Economy and Finance and one which, let us hope, will not long survive. When once the precious metal has been freed from the shackles of laws which are unworthy of the age in which we live, who knows what uses may not be in store for it to benefit the whole world?”
I’m guessing we are not quite at the stage of laughing at our forefathers yet?
I am glad to see this comment. Mitchell Innes was influenced by HD Macleod; at least Keynes thought so; and Keynes was moved by ‘’What is Money? to write a slightly confusing, enigmatic book review of Innes’’s work in the ‘Economic Journal’, in 1914.
Not only Mosler refers to Innes. Randall Wray and Stephanie Kelton edited a collection of academic papers, ‘Credit and State Theories of Money: The Contributions of A. Mitchell Innes’ in 2004. In Wray’s concluding chapter, he wrote this: ”Does A. Mitchell Innes offer any insights for modern monetary theorists on the nature of money? It should be obvious from the preceding chapters that we believe he does. There are two remarkable things about his two articles. First, there is the clarity of his analysis, much of it based on little more than hunches about the history of money — a history that largely remained to be discovered, developed and written over the century that followed publication of his articles. We certainly would not wish to defend all of these hunches, but the general interpretation is sound. Second, it is amazing that the path laid down by Innes was ignored by almost all subsequent monetary theory. Of course, Innes was anything but a well-known monetary theorist and his articles were published in a banking law journal. However, as the journal’s editor remarked in 1914, ‘the article attracted world-wide attention, and evoked much comment and criticism, from economists, college professors and bankers, as well as from the daily and financial press, because he differed so widely from the doctrine of Adam Smith and the present theories of political economy’”.
It is worth revisiting Macleod and Innes, and it is worth remembering in the current climate of MMT, what Wray wrote above, about what happened to Innes’s ideas.
Another writer from that same period (very early 20th century) who is overlooked in this context was Swedish economist, Knut Wicksell. He’s not as obscure as Innes, in fact he was known to be an influence on Keynes https://www.britannica.com/topic/economic-stabilizer/Keynes-and-Wicksell
as well some neo-classical theorists but few, if any, raise his name in relation to MMT (well maybe one or two might – like this article from Lars Syll: https://rwer.wordpress.com/2018/05/03/mmt-the-wicksell-connection/).
Although, I haven’t seen anyone acknowledge that he was probably the first (?) to identify endogenous (bank credit) money creation and that in doing so he had debunked the Quantity Theory of Money several years before Irving Fisher gave the QTM its modern form.
For example take this quote of his from 1907
“The banks in their lending business are not only not limited by their own capital; they are not, at least not immediately, limited by any capital whatever; by concentrating in their hands almost all payments, they themselves create the money required, or, what is the same thing, they accelerate
ad libitum the rapidity of the circulation of money.
The sum borrowed today in order to buy commodities is placed by the seller of the goods on his account at the same bank or some other bank, and can be lent the very next day to some other person with the same effect. As the German author, Emil Struck, justly says in his well-known sketch of the English money market: in our days demand and supply of money have become about the same thing, the demand to a large extent creating its own supply.”
https://www.econlib.org/library/Essays/wcksInt.html
There we have it, money created on demand and “ad libitum” through bank lending.
Wow, thank you John and marco for all this context. Fascinating that the concepts of ‘modern’ monetary theory (guessing that the modern and the theory need to go,,, leaving ‘monetary’, which doesn’t have quite the same ring to it) were in people’s minds so long ago. Well, they WERE just thrashing out the finishing touches to quantum theory at about the same time, so I shouldn’t have been surprised when I think about it!
As I have often said, it’s not modern
Things are getting a little hysterical. This blog is beginning to sound a bit like Chicken Licken. Things may be bad but the world is not going to end for the people who post here. On the other hand, life is pretty shit already for those who suffer from the effects of austerity. Please remember that the big issue is CLIMATE CHANGE. And I don’t wish to be abused because I don’t follow your agenda. I’ve been on the planet a while longer than you and to quote my granny – I’ve heard it all before.
Rod
Do you think we don’t know about climate change
I did co-create the Green New Deal
Richard
Before writing this article, you should have followed R.Kennedy’s advice(see your 3rd article today).
I framed it with that advice
I do know what I am doing
Richard, seeing as many comments here are all a bit weird anyway (except mine, and the replies, obviously), will you indulge me a bit of conspiracy theorising? I have already posted it elsewhere, so will just paste the same, and hope the simplified economic aspects of it (roughly outlined) do not take too hard a beating,,,
My latest suspicion on the reason for the decision to leave the EU – I have not abandoned the reasoning about how much the UK state government/actors wanted to get out of the EU before the tax transparency laws came into place and wreck their nice little laundering system – but I think that might have more to do with the timing than being the driving force. So this theory is more on the conspiracy side of thinking, but eminently plausible if you consider the close ties between US and UK security services, the need to maintain the status quo for all state actors, and the huge amount of money involved. It came to me while reading about the gold-standard ending – it was what the US based their currency value on until Nixon scrapped that in favour of our current fiat system (all western economies adopted it) – but the US went on to effectively base their value of currency on oil – hence the term petrodollar – making an agreement with Saudi Arabia so that all oil is bought and sold in US dollars – which effectively makes any oil-using nation beholden to the US. Nice work if you can get it.
Now, (yes I know this is taking ages, I have better things to do too), there was an incident recently – I will need to look up which country it was, I have totally forgotten that detail for some reason – where this country was making an agreement with the EU to buy oil in Euros. This is a major thing – it would mean the US didn’t have a monopoly, and the EU would be serious competition – and the value of the petrodollar would be in jeopardy. A huge problem for the US. Sanctions were applied or threatened I believe (I will have to check this), and no deal was made to buy oil in Euros.
Having observed some of the terrible behaviour of UK politicians in their ‘negotiating’ with the EU, and their generally hostile attitude, and their rather inflammatory attempts to negotiate with individual EU countries, and some of the reporting – sensationalised style – that the EU will not survive Brexit, it will soon crumble etc (despite every single piece of evidence showing it to be holding strong, united, and resilient – in fact more so now) – strange how this reporting is totally contrary to reality. We also have evidence, through the Anonymous leaks of the integrity Initiative documents that the UK is actively trying to influence other EU countries with misinformation (not really cricket that).
And we know that the US, the UK and Saudi Arabia are the bestest of buddies.
Well, what if the whole plan in the first place (opportunism or not) was to destabilise the EU? (To stop it muscling into the Oil selling/buying market with the Euro). The US promises the UK elites some rewards (gold investments I am sure are just a tiny fraction of deals going on), they full on make a dogs dinner of it to cause as much disruption as possible, and they are untouchable as politicians (refer to Tony Blair and war crimes) so can retire fat and happy. The EU doesn’t seem to be playing ball with this plan though.
But keep an ear out for all those mentions of ‘the EU won’t survive this’, ‘it’s on its end days’, ‘PM will make a deal with,,,(EU country)’ – why else would these things still be getting said when at no time the EU has ever shown the tiniest chink of weakness, or shown any lack of solidarity or deviation of their stated intentions? So, could it be the US trying to oust the potential competition? Destabilising the EU and so weakening the Euro would certainly aid the petrodollar.
On an aside: I was consideration the Integrity Intiative and Institute of Statecraft there – hundreds of millions of pounds are being spent on these ‘security services’ projects – and some of that is my generously donated cash (tax, not cash, and not willingly donated) – to spread anti-Russian propaganda. Now, I am sure they think that’s worthwhile to counter pro-Russian propanganda. Generally I don’t. But imagine if these massively funded propaganda machines were used for good things, like pushing forward the ideas behind the Green New Deal. Imagine how fast if would gain traction? Billions thrown at just selling the idea. The scale of money governments command is enormous is it not, if they can waste so much just on peddling misinformation to the general public. And it puts in perspective how easily any government of the UK scale could implement a (radical?) change like the GND. Yep, makes you think.
I think an anti-EU theory is plausible
The anti-transparency theory is not
Curiously I think the EU will emerge stronger from this
I am not sure many will be following the UK
Fascinating. The transparency part didn’t seem quite a big enough reason, as the full enormity the damage that leaving the EU will do to the UK gets revealed (and I’m sure we can only guess at half of it) – or rather, the damage the UK’s method of leaving will do. Still, I don’t like to drop it as an part-incentive quite yet, I will place it as a minor possible reason under ‘timing’.
In general, any politician that reaches PM level is very ambitious, and this event will be the ruin of Theresa May’s career, so there must be a good pay-off. And you have to wonder what that could be, to compensate for the legacy she will leave behind. Corbyn’s behaviour (avoidance) seems more normal.
One of the most surprising things I have discovered over the past couple of years is that UK politicians used to command a huge amount of respect abroad – I still can’t quite get my head round that one, I assumed everyone felt the same amount contempt for them as I do. Ach well, they’ve learnt now.
And I agree, I think the EU will come out of this all the stronger. Is that curious though? Or just the UK media telling us that they thought otherwise?