The Office for National Statistics has reported this morning that:
- UK real gross domestic product (GDP) is estimated to have shown no growth in Quarter 3 (July to Sept) 2024, revised down from the first estimate increase of 0.1%.
- The quarterly path of real GDP at an aggregate level is unchanged from Quarter 1 (Jan to Mar) 2023 to Quarter 1 2024, however, there have been downward revisions of 0.1 percentage points in Quarter 2 (Apr to June) and Quarter 3 2024.
- Within the output approach to measuring GDP, there was no growth in the services sector in the latest quarter, whilst a 0.7% increase in construction was offset by a 0.4% fall in production.
- Early estimates show that real GDP per head fell by 0.2% in Quarter 3 2024, and is 0.2% lower compared with the same quarter a year ago.
- Early estimates of real households' disposable income per head show no growth in Quarter 3 2024, following growth of 1.4% in the previous quarter.
- The household saving ratio is estimated at 10.1% in the latest quarter, down from 10.3% in Quarter 2 2024.
I made it clear in May that this would happen, and continue.
I had previously stated that I did not believe in growth. As I argued earlier this year:
Growth is the wrong goal. Meeting need is what we must do, for everyone. Only then can we consider meeting wants, and then only within sustainable limits.
For those who think that this suggests that we will have a miserable existence, think about what it is that have created all the most valuable memories and experiences in your life. I can almost guarantee that none of them related to material consumption that satisfied a want. Almost all of them will relate to an occasion when you shared an experience with others, whether that was an intimate moment, or a family event, or a concert, or some similar experience, such as the celebration of an achievement. What all these things have in common is that each also relates to the meeting of the need, whether that be be for emotional, intellectual, or spiritual well-being.
Meeting those higher order needs is harder, however, if our material needs are not met . It is very hard to be joyful when you are hungry, cold, destitute, or are living in fear. Meeting need is, then, the precondition of happiness. Supplying the wants of some, at cost to meeting the needs of others must always, in that case, be a sub-optimal objective. GDP growth is, in that case, always the wrong goal in economics.
That economics has moved far from its roots in moral philosophy is evident from its focus on growth . It needs to go back to its roots and talk about what is right. Meeting everyone's needs is the right goal for economics. It is what any government should do. And that is why I will criticise any government that fails to achieve that, most especially if it does not even try to do so.
This is a growing belief on my part, which I might explore more over coming days.
But what I do know is that this failure blows Labour apart. Growth is their be all and end all. It is not going to happen. Worse, as Martin Wolf notes in the FT today, Labour is actually crushing the animal spirits that might drive growth. They have, in that case, no chance of delivering their plans.
We are left with two choices in that case. One is government by oligarchs, who will crush the economy so long as it advances their cause.
The other is a wholly new approach to economics. I see very little in between these two positions.
The old narratives are dead. We are waiting for the new to be born.
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Its interesting to consider the ‘human factors’ impact of the economy increasingly not meeting peoples needs.
Placing people under increasing stress means they are more likley to make ‘bad decisions’ as there ability to cope has been undermined.
You only have to look at the stories of those convicted for this summers riots to see that happening.
As we know, GDP measures total output of a country. With UK population grow running at 1% p.a. figures for GDP per head better reflect lived economic experience (which is not evenly spread…).
The latest estimates show that GDP was 2.9% above its pre-coronavirus (COVID-19) pandemic levels in Quarter 2 (Apr to June) 2024. However, GDP per head is still 0.6% below its level from Quarter 4 (Oct to Dec) 2019. A continuing downward trend may be anticipated in the next update, expected soon.
https://www.ons.gov.uk/economy/grossdomesticproductgdp/articles/trendsinukrealgdpperhead/2022to2024
Is it a surprise that the UK’s economy fails to grow when multinational companies, billionaires and the wealthy fail to declare, or are allowed to offshore, vast amounts / profit and then fail to invest in productive capacity in the UK.
The sums are significant
But not nearly as significant as they were now
What are the new ones you suggest?
Read here in 2025
Give me a chance
@Jake
To begin with, someone in government with a descent sized pair of $*lls could tell the NIMBY people that “Yes we are going to build 10,000 houses so get out of the way”. Money spent on construction, especially home construction, employs people on levels of the economic spectrum and the money filters out to almost all sectors of both the local and national economy. It also takes care of the housing needs of people.
MMmm, the whole problem is that to Mssrs Starmer and Reeves, words are just the items with which one creates mood music, election manifestos and awards blame to others. Nothing else.
‘Narratives’ = when words are used for the objective of public relations/ or the above.
The key thing is No Narrative should ever include the words ‘Inequality’, or ‘Kuznets ratio/curve’, ‘genocide’, ‘Infrastructure investment’, ‘progressive taxation’, etc., etc..
Yup, 4 more years of balancing books; tory black-holes = bad; BlackRock = Good – then Badenoch and Farage come in to simplify our tax system with ‘growth-inducing’ flat rates.
Starmer+Co de-natured Labour as a left-of-centre political party, now they’re de-naturing Britain as a competitive economy that serves its citizens.
Gramsci, I think, described what we are going through as the death throes of old society before the new is born.
He was on my mind
I do wonder what Gramsci would make of how the old has defended itself against the new?
Neo-liberalism is a ‘sticky problem’ – but then again, at its dark heart is an authoritarianism that rivals Stalinism in its cold-hearted crowding out of complementary ways and means, Nazism for its lack of tolerance in the body politic allied with the more sinister and artificial kind face of manipulative public relations practice.
This has morphed into the harvesting of internet profiling at scale to the point where personal preferences and biases (prejudices) just all meld together into exploitable attributes that can be put to use to confuse and divide, leaving us to seek refuge in ‘stuff’ and not each other.
Aurelien makes a point in his most recent essay ‘The Year of Failing to Understand’ that in some societies who have been traditionally at odds with the West, violence is a normal response in asserting their rights or expressing their frustrations in the face of immovable intransigence. Since Western democracies now seem to think that they can import past imperial attitudes into their domestic affairs (exploiting their voters, treating them like chattels) then maybe we are actually on the same trajectory in the long run? ‘Not nice to consider is it?
I am also grateful to Steve Keen’s recent sub-stack, highlighting Veblen’s 1898 assertion that neo-classical economics is ‘taxonomic’ – adept at describing economic things in a very static way and setting it in stone rather than being ‘evolutionary’ and ignoring tracking changes and feedback loops – something I picked up from Keen’s ‘Debunking Economics’ book years ago on its first print.
In fact, using a bit of wordplay one could go further – neo-liberalism is actually ‘taxi-dermic’ – that is it takes something old and essentially dead and prepares it, stuffs it, and mounts it so that it has a ‘lifelike appearance’. Is that not the neo-liberal political economy we live in? Because all it does is preserve the monopolist status quo, the old money so to speak which now can even draw upon the new money (the real big lesson of 2008).
You know, all these words we write about these issues – one day I feel that we will be faced with no option but to step up to the plate and do more than merely speak of them, even if it is only to prevent a bloody reckoning.
I watch the events in Syria with much hope as I can muster. Please please don’t make a mess of it.
PSR
Much to agree with. I have not got to that Aurelian essay as yet. Steve, I have. And he was good.
Then I did Talk TV. What a shower.
Go well.
Richard
What is “Talk TV”?????
A rubbish TV channel on which I told a presenter he did not know what he was talking about yesterday. He thought I was very rude to contradict him. I think he was using the last defence of those who know they are out of their depth.
As to be expected from Gramsci, his assessment was FAR starker than that.
What he said was “The old world is dying, and the new world struggles to be born: now is the time of monsters.”
Who can say that our experience since the Great Financial Crash of 2007/8 has not been an experience of one “monster” after another?
Liz “lettuce” Truss as PM for example, as perhaps its pinnacle? Or any of the PM’s from Brown, or certainly Cameron, to Starmer?
Where are the politicians of the stature of Attlee and Bevan, or Macmillan and Heath? All swallowed up in the maw of egocentric, “me first”, and “private good, public bad” Neoliberalism. (And for those who would defend her, I include Margaret Thatcher in that, as the joint architect, with Ronald Reagan, or the nonsense of Neoliberalism).
(On which, see the Chris Hedges Report – Hat tip Progrsssive Pulse
https://youtu.be/see5c5Sgi14)
That is something to watch later
When I have finished with some Aurelian
Thanks
“I can almost guarantee that none of them related to material consumption that satisfied a want” I have noted the “almost”.
I built a PC from, mostly new components, my personal growth increased that day as my old PC was 2010 old. I wanted a new computer & I hadn’t built one since 1997. So without personal financial growth, from a very low income I wouldn’t be enjoying my new PC and the pride and satisfaction it brought me. Nor could I have enjoyed a comedy show without funds. But I get the thread. Depends were you start money wise I suppose & I do still live in fear it will be taken from us.
I think you made Prof’s point excellently.
You got satisfaction by building a new computer yourself, materially you might have spent more by building one to your personal specification, than by buying one off the shelf, but you gained satisfaction and knowledge by building it yourself.
That extra was priceless, by converting my 10 yr old machine from Windows to Linux has been a similar experience, for which I must thank the local Mastodon contributors for their help and support.
GDP effect Zero or negative, personal commonweal immense. Similarly when I grow my own veg, from saved seed, I contribute nothing to GDP but I help sustain in a small way my health and investment in my great grandchildren not even yet a twinkle in their parents eyes!
”But what I do know is that this failure blows Labour apart. Growth is their be all and end all. It is not going to happen”
I completely agree Richard which gives rise to this question, in six months time after labour are annihilated at the local elections or maybe a year if they are very dim witted and slow to catch on, what happens when they are all sat in a cabinet meeting and some bright spark pops the question ‘where is the growth we promised’?
“what are we going to do”?
I wonder what they will say as they gaze up and down the table in complete bewilderment
I would love to be a fly on the wall when that happens.
They will be just four years from the next general election and time will already be running out.
Will they give a shit?
Will they be busy building their life saving bridges with their donors for the furtherance of their careers?
Given how dumb they undoubtedly are I suspect fear will grip them and they will double down on the nonsense economics they belive in.
They will also make the mistake of moving further to the right in a hopeless bid to outflank the Tories and Farage.
It’s not going to be pretty
Your conclusion is correct
Fear will grip their hearts
The economy is flat-lining after a few quarters of modest growth. No doubt all the doom and gloom talk from Starmer and Reeves has played a part, but the sobering thing to remember is that the steep increases in employers’ Nic have not even kicked in. When that happens in April the unemployment figures will start to rise and government finances will take a further hit. Reeves’ response to that is sure to be further spending cuts.
It’s fairly obvious that the UK is heading for recession early in 2025, by which time the budget will be seen as a disastrous miscalculation.
‘Richard – “….. government by oligarchs, or …… a wholly new approach …..”
Not in the BBC’s view .
Today’s grilling of Badenoch – a relentless narrative that the only alternative is r Reform/Farage ,,,,, only the oligarchs.
Not even a glimmer or nod to what those who elected t libdems, green and independents MPs thought they were voting for.
This is 1984 stuff . – BBC promoted climate denial for twenty years platforming Nigel Lawson against the science, and now they are relentlessly platforming Reform/Farage with not a hint of journalistic curiosty about whether there could be another way.
They have ‘editorial guidelines’ – ‘not to mislead’, ‘hold power to account’ etc, which they have converted into ‘tramlines’ – ‘there is no alternative’
Thank you to Richard and commenters.
I thought Reeves would be safe until the summer of 2026, but wonder if she will last beyond next summer. Next year’s local elections are largely in Tory seats, so there’s little opportunity to scapegoat her on the basis of these results, but things could much worse by then.
@ Richard: Further to Aditya Chakraborrty’s recent piece and his suggestion that some Labour MPs are worried, have you any insight or been in touch with AC or Labour MP contacts?
On Saturday, I heard from mutual friend that Chris Philp is quietly preparing for the succession to Bad Enoch.
I think Reeves will be lucky to make 2026.
And, although I know and like AC, we have not spoken recently. I have with Labour MPs. They are very unhappy.
Go well
Thank you, Richard.
One hopes the family and you enjoy some rest over the festive break.
Thanks, Colonel.
Excepting this blog, I am off for maybe 10 days now. And that’s a long tome for me, so I suspect I will do something. Inactivity is not good for me.
Thanks for your contributions this year. I hope you and your parents have a good Christmas.
The really annoying thing, is that we can meet everyone’s wants right now, without destroyin the planet in the process:
This from Jason Hickel:
https://www.sciencedirect.com/science/article/pii/S2452292924000493#
We don’t have a growth problem, never have had.
What we have a distribution problem.
I completely agree
“….the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.” RFK Senior
I wholeheartedly agree and have been convinced for many years that a new approach to economics must be developed. Personally I think an understanding of MMT, money creation and the power of fiscal policy by both policy makers, economic journalists and subsequently the wider public, is crucial. Hence my continued admiration and support of your efforts and others to this blog
I have some reflections on this coming over the next few days, and next year
GDP is a measure of something – not a very good one, even for what it claims to measure, apparently. But it can be held up to indicate some sort of success or failure.
What can we construct for a measure of housing, nutrition, security and happiness for the average (?) population, which can indicate success or failure in its achievement, to combat this dreadful “growth” measurement?
Money comes and money goes
It is just a series of 0s
NOT MY QUOTE
I wish it was
Richard, AJ Bell do a dividends dashboard. Major Firms FTSE 100 reported £79bn dividends in 2024 on the back of circa £237bn in pretax profit. Apparently a record. This rise in dividends comes on the back of £50bn share buybacks. AJ Bell predicts £84bn in dividends in 2025. My point is big business as opposed to small businesses is doing well. Not that this stops them complaining about the recent budget changes.
There is a new world being born, and I will continue to strenuously emphasize that the threat is not Trump. He is only an avatar of a sociopathic cults of billionaires.
Neoliberalism is and always was an ask that a people surrender their sovereignty to totalitarian rule by wealth. They are organized and they collaborate to seize the means of government and then dismantle it.
Their goal, the PayPal mafia TESCREAL gang, is to obliterate all forms of government (defined as democratic republics) and to replace it with a patchwork city states where they rule absolutely. It is a bizarre dystopic and quite often surreal set of beliefs that these people have been talking about and paying money to force on society for five decades.
And realistically in the midst Of an escalating climate crisis, the extreme weather that constantly tears apart existing productive capacity and existing ways of production the most direct action people must take is to render their local communities, resilient and independent of the national and global supply chainss. This is an existential necessity as well as a defiance of this tyranny.
And I will mention Blair Fix And some of his colleagues has produced quite a few bits of work that demonstrate at least correlate that growth is equal to economic consolidation is equal to energy intensity. We burn lots of energy energy in order for all guards to consolidate their grip on the economy.
Growth in this sense is the agency of tyranny. Unfortunately narratives of self-sufficiency are often quickly labeled as primitivism which was per Pol Pot, a method of fascism. Yet there is a huge distinction where people organize as a community in order to sustain themselves. And if you want an example of what a world could look like that just look at what some Finns have done. I want to ask people would you give up your shit job, to live in a world in comfort with no debt and your food and energy that needs largely met without cost. The community below is an example of the vast gap between what it takes to actually enjoy comfortable living compared to maternity.
https://www.youtube.com/watch?v=GYtPRuLbJCg