As the Office for National Statistics reports this morning:
- UK gross domestic product (GDP) is estimated to have increased by 0.3% in Quarter 2 (Apr to June) 2025, following an increase of 0.7% in Quarter 1 (Jan to Mar) 2025.
- GDP is estimated to have increased by 1.2% in Quarter 2 2025, compared with the same quarter a year ago.
- In output terms, growth in the latest quarter was driven by increases of 0.4% in services and 1.2% in construction; while the production sector fell by 0.3%.
- Real GDP per head is estimated to have grown by 0.2% in the latest quarter and is up 0.7% compared with the same quarter a year ago.
Rachel Reeves's dream for growth is fading away. Liked the parrot nailed to the perch; it is no more. It is ex-growth.
So, what will she do now? Her choice is between austerity and injecting more government spending into the economy when it is obvious that there are unused resources in the country, including the labour of vast numbers of young people who cannot secure jobs that match their aspirations and who want to work. She could deliver well-being without the risk of inflation if she wished, but will she?
Our fate lies in her hands.
I have a horrible suspicion that she will make the wrong choice. Her debt paranoia will see people's lives go to waste. It would be unforgivable if that were to happen.
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The NHS is a case in point. We have a shortage of staff and long backlogs and waiting lists. So why can’t newly qualified doctors and nurses find jobs within the NHS? Because the Treasury won’t make the funds available to employ them. Even though health spending has perhaps the largest multiplier. Even though the state should be devoted to increasing the population’s wellbeing, rather than prioritising the counting of tokens of value to meet fiscal rules invented by politicians.
Agreed, entirely.
I’ve just sent the following email to the BBC department that deals with errors:
Hi,
Your report today on the growth figures includes the following:
“The strength of the economy affects things like pay increases for workers and the amount of tax the government can raise to pay for services”
The Government does not pay for services with tax revenues. All Government spending is made with new money created for it by the Bank of England, in the form of a loan. Tax is used to repay the loan. This fundamental misrepresentation by the media is leading to widespread misunderstanding throughout the population of the true nature of public spending, with profound implications for our society. Please look into this issue thoroughly and put things right..
Thanks
And good luck
@Cliff B
Wonderful!
If you can take the time, when you receive the unsatisfactory response (as you will), please, please escalate the issue to the Complaints Department.
Their standard opening response is, “Our readers do not have expert knowledge and we have to bear that in mind that we are writing for a general audience.”
It’s about time the MMT “community” let them know that their “general audience” understands more than the BBC editors. We need to force them to justify their lies (in order to demonstrate their lying).
Can we create a long-enough lever to shift the world? Not if we give up trying.
(My next target is the Public Standards Committee – misleading the House – but I am not sure I can muster the correct language. A work in progress.)
Good luck
Anne, I believe it’s the second sentence of your third paragraph that hits the nail on the head. Of course they are lying, but why are they lying? Obviously, as Richard said in the Overton Window article, if you only read, watch or listen to the M.S.M, then at the very least, they are going to be disingenuous. I’m afraid as a Scot, we, well, at least those of us who support Scottish Independence have been subjected to this sort of brainwashing by the B.BC, especially B.B.C Scotland, for many years, both in the run up to the Independence Referendum in 2014, and indeed, it has continued unabated ever since. I have emailed the B.B.C on many occasions over the years with complaints about their version of events, to no avail. These people who are perpetuating the lies, know very well they have the backing of their masters, and no action will be taken against them. So it’s going to up to independent blogs such as this, to keep the flag flying for truth.
Agreed, and obviously true.
Cliff
I hope you receive an adequate response from the BBC, although I very much doubt it. This links so well to the household spending analogy. It’s organisations like the BBC who spread misinformation but never own up to their errors. There must be enough intelligent people at the BBC to know that this is rubbish. Are they being ordered by higher management to tell people things that are untrue?
I recall Robert Peston saying that when he worked for the BBC, the Today Programme took its lead from whatever was the headline in that days Daily Telegraph. This would then cascade to every other BBC news bulletin whether it be other radio stations or the 6 o’clock news on the TV.
“I recall Robert Peston saying that when he worked for the BBC, the Today Programme took its lead from whatever was the headline in that days Daily Telegraph. This would then cascade to every other BBC news bulletin whether it be other radio stations or the 6 o’clock news on the TV”.
Chartered and franchised terrestrial broadcasters cannot, in general simply set the news agenda according to their own preferences, or without reference to impartiality, under the terms of their Charter/franchise. How do they that?. They require a framework in which they can implicitly show some form of conformity to a (undefined, unstated) standard, at least in general if not by exception (day in, day out), to what is taken, ‘in the ether’ as this standard news agenda. There is no need to formalise the process; the insiders all know how it works. It is silent. That is why it works.
This standard is provided by other national (vaguely defined) news providers; typically, the Press. The Press, however are not constrained by a Charter, and can set their own agenda, as they – or their billionaire owners – please. The broadcaster may ignore the daily Star, but are much less likey to ignore the Daily Telegraph or Daily Mail.
Correct
“ All Government spending is made with new money created for it by the Bank of England, in the form of a loan”.
Does that include the salaries of people employed by local authorities? Social workers, building inspectors etc.
If funded by central government ( and most is), yes. Not if funded by council tax.
Don’t expect Rachel and/or no steer Starmer to do anything remotely positive. Rachel’s fixation with the markets delivering everything utterly blinds her to reality. Expect more garbage about there is no money and the only course open to her is more austerity.
If growth is the target austerity cannot be the solution simply because it takes away support and that can only harm growth.
Instead, Reeves needs to fund public and private growth. Restore the smart grants take. Away from businesses ‘for review’, and introduce more investments to build the industries of the future. But she needs to do this alongside supporting the NHS and other vital public services, or at best that would create growth with one hand and take it away with the other.
It’s the mixed messages that bother me. Growth is everything as the message, but anti-growth actions.
Caveat, good growth – no erosion of workers rights, etc, otherwise inequality will accelerate further.
We don’t have to guess that she will make the wrong choices. Her article in the Guardian today makes it clear she has and will make the wrong choices.
I have not seen that as yet…I am finite…
This is only tangentially connected to this article, but relates to your predictions of a 2008-style crash and previous discussions on the effects of AI on work. It may be that your predicted crash could come from the bursting of the AI bubble and the disingenuous way AI is being sold to businesses. It’s well worth a read, with some useful links, and will no doubt impact our economy and growth. It’s a definite headache in waiting for Reeve, and another crisis she will likely be incapable of responding to.
https://pluralistic.net/2025/08/13/then-they-came-for-me/
Thanks
The amount of money going into AI suggests it is going to be very hard for it all, or indeed most of it, to earn a return.
I loved the Keith Olbermann style of defenestration in this article, so thank you. It made me smile.
However, I do think it is optimism, and very tempting optimism, to be smug on these issues. (What could have more popular appeal than seeing vile celebrities get their just deserts?) Billions of dollars were burned attempting to short Tesla in its heyday, and Tesla was massively overvalued. In fact, it’s no secret that the entire tech sector is, and has been, overweight for a long time. But if you had bet against the tech sector, you would be significantly poorer for it. Now look at Palantir’s recent numbers. And that’s without interest rate cuts, which (if Trump has his way) may come regardless of what inflation looks like.
The market isn’t rational. It’s political. And not a very palatable sort of political. (This would be the decoupling I mentioned in one of my earlier comments.) When it isn’t political enough, then bailouts happen, or the rules change. Or a literal Hindenburg comes out of the woodwork with damaging allegations.
AI is merely one aspect of this politicization, and it is already being funded by the taxpayer (think utility bills), and deployed against them through marketing and viral propaganda. With the critical side benefit of eroding critical thinking skills. A very useful tool from a certain point of view, and one unlikely to be discarded any time soon. Especially in light of the overall push for higher energy consumption and election interference abroad.
If your plans hinge on a bubble pop, I would recommend diversifying your strategy.
I totally agree that Reeves needs to adopt Keynesian logic and start making use of the available resources to improve the state of public services and infrastructure. I would even support her using tax to help switch resources from pointless frothy activities to where they are needed in greater priority. I would also like to see more encouragement for SMEs.
But I think greater importance also needs to be given to our significant negative trade balance. I am amazed at how little it is talked about.
The reality is it is all down to the City of London….
I feel a video coming on
Rachel is in a corner. Cutting spending will incur the wrath of Labour MPs who have tasted blood during the benefits row and are unlikely to be docile at budget time. Raising income tax will break a manifesto pledge. Borrowing more could rile the markets and lead to a rise in interest rates. Reeves is terrified of a Truss moment. Where else is there to turn but taxes on wealth which would be a just, sensible and above all popular move. ( How many of those has this government made?) Reports suggest that she is looking at reforms to IHT, but even that is fraught with political risk for a Labour government, Unless the reforms are arranged so as to substantially target the very wealthiest there will be resentment, especially in the South from those who are merely better off. The narrative is already surfacing that Labour takes from hardworking and thrifty families and gives to feckless benefit cheats. The government may have a large majority, but it does not have a secure majority for an austerity budget. If RR tries to go with “tough choices” and face down her MPS my instinct is that she will lose. What then would be her choices? To resign, or get the budget through with Tory votes. A death knell for Labour.
Sheila,
We know from reading this blog that governments don’t really borrow and also govs actually should control interest rates as a result. I appreciate that’s not how they and the media present it, but it’s the truth.
I don’t think Rachel reads this blog.
You have identified why Reeves was doomed even before the election. She said she could not make any commitments on spending until she got in to power and could examine the books in details, but then said she would not increase income tax. It was political naivety not to take the same line about getting in to power and seeing the books on both issues.
The neoliberal monetarist plates are up and spinning…
https://www.theguardian.com/business/2025/aug/14/uk-economy-avoids-flatlining-slowdown-tax-rises-trump-trade-war
Apparently this is really GOOD news.
That article is spinning so fast I’m getting dizzy.
So is this one:
https://www.theguardian.com/business/2025/aug/14/economic-bounceback-may-be-under-way-but-reeves-cannot-afford-to-relax
We are being setup for a story that both boasts of success but also preaches austerity.
The capacity of the mainstream media to spin bullsh*t is quite extraordinary, particularly in the light of the facts of this matter, which shownthat, at best, this growth is marginal in the extreme,
How exactly do these GDP figures square with the following – exports to the USA down £2 billion?
https://www.independent.co.uk/news/uk/politics/trump-tariff-uk-exports-us-goods-b2807597.html
The GDP figures show that production is down and declining, and that is consistent with the export data.
Yesterday, on my way into Liverpool, I had an incredibly detailed conversation with a couple in Thier sixties. Context – the Lpool to Manchester train an hour before had been cancelled. The next train was so late,and NR had decided to omit stations to get back on schedule. We started bemoaning the state of the UK, the paucity of investment in infrastructure, NHS collapse, how disgusted they are with the BBC and there continual propaganda and giving Foghorn a platform… They are angry. There must be better ideas to run this country and give everyone a chance!
I bet there are many more out there like them. I have pointed them in the direction of your videos and blogs.
I know you are pressed for time but Are you aware of this…
https://m.youtube.com/watch?v=5hufqanB17A&t=176s&pp=ygUbV2h5IHJpY2hhcmQgbXVycGh5IGlzIHdyb25n#bottom-sheet
I think it’s nonsense although I admit I did not watch it all.
I wondered whether to point you in the direction of the video when I saw it. Basic gist is, they say Gary is talking about assets, that the UK is running out of assets to sell, and that the rich are gobbling everything up. It still doesn’t address the fact that the government can generate money and strategically tax in the right places to force the wealthy to give up their assets. It seems like they are missing something, and just leaping to the defence of someone rather than thinking it though.
This idea that the UK is running out of assets is also nonsense. It is true that the government has very few left that are available to privatise any more, and with that I agree, but that was never a good source of revenue, and revenue does not, in any case, fund government spending and so there is a fundamental misunderstanding on display here, as I have already explained.
Real wages are down
Taxes are up, a raid in our NI and frozen tax threshold means we all pay more.
Real inflation is higher than the ONS make out and higher than almost all pay rises.
So nearly everyone us getting a real terms cut in pay.
Number of jobs are down and the number good jobs are down even more.
How can there possibly be any growth?
(anyone who thinks employers NI is not part of the wages bill is in a dreamworld)
Real wages ate actually up.
It’s best to use facts.
Real wages are up! Everyone I know, from work colleagues, associates, family and friends and myself have not had an above inflation pay increase since covid ie. we are worse off. We are obviously not recieving “real wages”. I am interested to know what benchmark or source you are using.
The above people I mention are Doctors, nurses, supermarket employees, production line fodder, me!
They are up 1% this year. You won’t have noticed, but that us the latest ONS data