We are heading for recession. This is from the Office for National Statistics:
- The first quarterly estimate of UK gross domestic product (GDP) shows an estimated fall of 0.2% in Quarter 3 (July to Sept) 2022.
- Monthly estimates published today (11 November 2022) show that GDP fell by 0.6% in September 2022 which was affected by the bank holiday for the State Funeral of Her Majesty Queen Elizabeth II, where some businesses closed or operated differently on this day.
- In output terms, there was a slowing on the quarter for the services, production and construction industries; the services sector slowed to flat output on the quarter driven by a fall in consumer-facing services, while the production sector fell by 1.5% in Quarter 3 2022, including falls in all 13 sub-sectors of the manufacturing sector.
- In expenditure terms, real household expenditure fell by 0.5% in Quarter 3 2022, while there were also large positive movements in international trade flows in the third quarter.
- Compared with the same quarter a year ago, the implied GDP deflator rose by 5.8%, primarily reflecting higher cost pressures faced by households.
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Hi All
Sorry to use the blog to ask a question but this blog turned me onto Drewry’s World Container Index (still dropping precipitously I note) as an indicator of a coming recession.
Are there any other reliable indicators that could be used? I ask only because I work in affordable development and the current business case we use is chock full of assumptions relating to growing inflation and it could stop us developing – there are no assumptions about possible deflation of costs due to unemployment or because of an inability to shift inventory through price cutting.
At the moment we are facing not being able to develop, just when more affordable housing might be be needed. I’m not joking.
Any suggestions gratefully received.
And BTW, I totally agree with the post. I think that it’s all deliberate to create a climate of fear and disruption as people begin I think (I hope) to wake up to the potential problems we are facing as a species.
sorry for the late reply,
PSR are you aware of the Baltic Dry Index (BDI) ?
Thank you aLurker – I will take a look!
Never heard of it until now.
and a government staffed by incompetents as well
This is an interesting article by a former diplomat about the problem and suggestions what to do about it.
https://bylinetimes.com/2022/11/11/amateur-hour-in-british-politics/?fbclid=IwAR2KlTjX9FV8dyoWwToeJSWzlWk01oT-InnIkqSyAcquYXGfOvNuoGXOHeA
Going back to yesterday’s post about spending on the NHS and the mulitplier effect. In what other areas might this effect be of use? In reference to PSR’s post above would state spending on affordable housing see a multiplier? What about state funded (and controlled) spending on wind farms or smaller community wind power projects? I have mentioned a RN ship building program but was informed that the multiple effect is smaller there. So where best, along with the NHS, could money be spent?
My apologies – I hav3 not the time today due to other (family) commitments to find 5he results for you
There are wide ranges of multiplier estimates and all have to be treated with care
In general investment always does well
Defence always does badly
Do a bit of Googling, I suggest
My apologies – I was casting my question out to the great good folk who come here with their suggestions Richard- not just relying on you. The container index is one and you have mentioned others – as a working stiff trying to keep up with these matters, I just forget that’s all. I have to admit however looking for the reliable no-bullshit Murphy seal of approval / caveats that you always offer!
Google it is.
In my local authority it is all doom and gloom at the moment – 2010 reprised. For all intents and purposes, it looks like mine is going to decamp to the dugout and lock themselves in and put up the barricades. It’s that’s serious.
Some time ago there was a discussion here about what GDP counted as activity of economic value. We are in recession and economic crisis. The NHS has more work than it can handle, and insufficient resources. A&E overwhelmed with work; not enough beds; ambulances queuing; waiting time growin exopnentially. No shortage of work, but nothing that counts positively as GDP. So what does?
Douglas Fraser, Business and Economy Editor, BBC Scotland was asked today on BBC GMS whether the World Cup may do anything to stimulate economic activity in the UK. Among the positives Fraser cited, was a possible uptick in Pizza deliveries. Contemplate that for a moment; then compare the economic value to Britain, its people and the health of its workforce; of Pizza sale and delivery, compared to the NHS. Of course the NHS unlikely to come out well from the economic comparison – if you are a neoliberal economist, or a typical British Party politician. I invite you to reflect for a moment on that.
Added value by the NHS broadly speaking is not counted in GDP – in essence the cost is
That is the essence of the point I wished to make. It is part of the neoliberal technique to focus on form over substance. The NHS is far more important, both as a an economic activity itself (with real outcomes), and as a driver of economic activity (whether in pharmaceuticals or equipment or new discoveries); and as a key deliverer of a healthy workforce; aside from the critical value it possesses as a fundamental common good for the whole community; than many of the industries considered crucially important to the public interest in GDP.
Take, for example the firework industry. The public services, including the fire brigade, are beset by public attacks on personnel answering local problems every November 5th (often running with fires and disturbances a week or so before the 5th). The public cost of the problem, and the injuries that arise lead to criticism of the industry; which then defends itself by criticising the implementation of regulations (or ‘red tape’ to use neoliberal media’s ironic term for ‘regulation’). If the regulations are not strict enough, or not applied adequately that is the fault of Governments that do not spend the money. The solution, however is soon found; not the hypothecation of taxes, but the hypothecation of spend. The firework industry would legitimately be charged for the costs to the community associated with its free enterprise operation. The problem then becomes more basic; is the firework industry sufficiently ‘free standing’ to afford the cost to the community of allowing it to operate? Probably not, and, of course such an hypothecation will never happen. I use it as a hypothetical (polemical) hypothecation. My point is otherwise.
Free enterprise is very rarely free. Typically it requires public financial support, or some form of protection, even from itself (the desolation of many old industrial sites in the UK are testimony to the ease with which industry has been able to walk away, free, without having to make any financial provision for their own obsolescence; the costs or consequences of giant obsolete industries mostly fall on the State (beyond some state decreed redundancy to staff, but not on the abandoned community; or fall on nobody at all). Quite often, the industry may not even be worth to the community the resources it uses to profit from its activity (nobody will know, because a complete audit has never been undertaken, and never will be because ‘accounting’ remains almost exclusively the creature of private enterprise, that measures only what is in its own interests); but it survives exclusively on the privileged protection that liberty offers in a free society.
Such common good provsions in the public sector as the NHS, however are far more important to the community, and are demonstrably badly under resourced; are given a latitude far less than the indulgence of many free enterprise sectors; but the NHS is not given the resources it requires because the distorted misrepresentation even of economic value offered by such absurd measures as current GDP, does not reward the NHS with the place in the hierarchy of economic wants and needs that its importance deserves.
Does private, for profit medicine count for GDP purposes?
Over the years, the more I have learnt about how economic statistics are compiled the more I have come to believe that:
(a) The statistics that we choose to collect are much more arbitrary than they should be and frequently fail to keep up with the changing times we live in.
(b) The rigour with which information is collected is largely unscrutinised on an international basis, making international comparisons unreliable.
(c) Huge decisions are made on the basis of this dubious information both by speculators in the Finance sector and politicians, such as Hunt and Sunak.
In a word, yes, they do count
But you are right to question official stats
When the GDP figures were announced this morning, I looked at the stock market and saw that the FTSE100 had risen (it has since dropped back slightly).
What I wondered was, if economic models are based on money, not people, then a substantial proportion of the population, who have little or no money, will not figure in those models. A hundred thousand cold hungry children will be less significant than one billionaire buying a luxury apartment.
Correct
This is a question.
Where can one find details about the type / extent / cost of allowances and expenses enjoyed by MPs and members of the House of Lords?
Register of members’ interests?
I am listening to Jeremy Hunt (another failed Health Secretary, now turned Chancellor only becuase the Conservatives have run out of people who wouldn’t frighten the children, or even their pets), who is follishly if gormlessly still denying that Brexit is a significant part of the problem.
We are now in official denial of reality; the economic equivalent of the Flat Earth Society is now in charge of Britain. The Conservative Party are clearly now scared witless of the BofE (which is chasing reduction of inflation over which it has no leverage to control); and even more of the ‘Financial Markets’ which has already pronounced that Conservative Party control over the economy has less appeal than the economic leadership potential of Mickey Mouse.
We can sum up wwhat this means with ith Roula Khalaf’s (editor, FT) immediate on-air summary; the best of Hunt’s approach is “no more fantasy economics “thin gruel for the hard-hit, but Khalaf then goes on to say there is not enough “transparency”: i.e., transparency on the impact of Brexit: or in other words, the Conservatives are still in denial of Brexit, which means we are still in fantasy economic territory. In short, we need lions, and are led by a Party of donkeys. The solution will not be found until the Conservatives are out of office; but then? Who can you rely on in our politics who will not offer the Brexiters more fantasy, who knows. Nobody.
Scotland knows what it has to do.
I forgot to say the programme with Hunt was of course, Laura Kuenssberg, BBC One this morning.
A stray inverted comma inserted itself into my comment, that may appear as if “thin gruel” was a Khalaf quote, but it wasn’t; it was my comment on Khalaf’s remark about transparency. It seems to me, however that even qualified media well able to comment robustly when the circumstances arise (whether right or wrong) on Conservative mismanagement of money ; like the FT, is frankly far too soft. The soft-soap delivery of Hunt (as compassionate Chancellor) doesn’t distract from the unforgivable, irredeemable failure of Conservative Government over twelve years of sustained bungling, or much, much worse. The Conservative Party has led Britain to the edge of the abyss, and now simply refuses to go – because it can, not because it should: solely to preserve the Party interest. It is frankly, despicable behaviour, by all of them. Resignation is the only decent option; that is the real definition of “integrity”.
I confess I find editing comments in the middle of writing them never goes well; rather like Conservative Party management of Britain’s finances …. when I think of it.
Stick to the flow….
Not only is it about the government not caring, they are grooming the UK in order to sell it off, lock stock and barrel. Charter cities, and Freeports. As a commenter pointed out in another article, councils will be forced to sell off land, buildings and infrastructure, to private profiteers. I’m sure I read that the government in England have already identified twelve cities they intend to force into being Charter cities. Anyone know which ones yet? It’s all deliberately orchestrated to put even more money into the hands of the rich who will control cities and the people who live and work in them. Looks like a decidedly dystopian future awaits the UK, unless the people can somehow manage to persuade the opposition party called Labour, to start actually opposing the Tories. If not, England is a one party state, and that’s pretty scary right now.