Update:
The ONS has just released the Q1 GDP growth figures (0.5% growth), however the underlying figures show that the rebalancing of the economy is working. Manufacturing up 1.1%, Services up 0.9% and production up 0.4%.
Showing posts with label GDP. Show all posts
Showing posts with label GDP. Show all posts
Wednesday, April 27, 2011
Rebalancing the economy
Just wanted to quickly share this little tidbit that the Spectator pointed out from CitiBank showing how the government really is managing to rebalance the economy towards exports and private sector investment. Whilst the two Eds (Ball and Milliband), and of course Gordon Brown believe that the only way out of a recession is public sector spending Osborne and Team and proving that it doesn't have to be the case.
Friday, February 19, 2010
Double dip recession, or did it never end?
Today’s news that UK Retail sales have fallen by 1.8% between December and January, the largest drop in over 18 months, is yet more bad economic news for the government. Coming on the back of the latest underlying unemployment figures, the glacially slow GDP growth figures and record government borrowing in January, I think that the chances of a double dip recession have just increased significantly.
The ONS are putting a brave face on the 1.8% decline, pointing to heavy snow fall in january that reduced the sale of household goods and petrol. I however suspect that steady drive of the January sales into December meant that the Q4 GDP boots of just 0.1% in the last quarter of 2009 had just as much to do with the january sales starting earlier than it did with economic growth.
I have been saying for a long time that the headline unemployment figures are hiding a nasty reality underneath and finally this time the mainstream media caught on, perhaps thanks to some quality briefing from CCHQ.
Total unemployment fell by 3000 to 2.46 million, a reduction of just 0.12%, which if this was a poll or survey would be well within the margins of error, whilst those claiming jobseekers allowance rose by 23,500 to 1.64 million, a rise of 1.45%. What this suggests is that there was a large group of individuals either doing seasonal work and who have now lost their job or who were holding out to find another job who have now been unable to find anything, neither of which are a good sign.
The rising number of people considered “underemployed”, i.e. who want to work more hours, is also a bad sign, someone who is working less hours than they want to no doubt has less money to spend. The number of people filling temporary jobs also increased perhaps showing that employers are unwilling to take on new contract staff and expect more bad times ahead.
Again the number of people who are economically inactive increased whilst a new record number of 16 and 17 year olds were unemployed which suggests that employers are continuing to allow people to retire without replacing them with new younger workers.
Perhaps the most worrying economic indicator towards a double dip though is the record government borrowing in January. I say record, but for the first time since records began the UK government have had to borrow money in January which is a terrible sign. Traditionally January is a very good income month for the government with VAT from increased Christmas sales, and income tax from the self employed. In total tax receipts were down 11.8% compared to last year meaning that the self employed and businesses have been hit hard. Either they haven’t made as much money in the past year as they did the previous year or in a potentially even worse situation they can’t afford to pay the tax they already owe. Neither situation is good news
Brown continues to tell us that we are best placed to come out of recession and that the recovery is fragile and any spending cuts will destroy it. In reality all the evidence seems to point either for us to double dip or that therecovery just hasn’t happened. The ONS have yet to revise the GDP growth statistics with full data and with indicators like this it won’t matter how much Brown prays for them to be revised upwards, I just can’t see how they will be.
The ONS are putting a brave face on the 1.8% decline, pointing to heavy snow fall in january that reduced the sale of household goods and petrol. I however suspect that steady drive of the January sales into December meant that the Q4 GDP boots of just 0.1% in the last quarter of 2009 had just as much to do with the january sales starting earlier than it did with economic growth.
I have been saying for a long time that the headline unemployment figures are hiding a nasty reality underneath and finally this time the mainstream media caught on, perhaps thanks to some quality briefing from CCHQ.
Total unemployment fell by 3000 to 2.46 million, a reduction of just 0.12%, which if this was a poll or survey would be well within the margins of error, whilst those claiming jobseekers allowance rose by 23,500 to 1.64 million, a rise of 1.45%. What this suggests is that there was a large group of individuals either doing seasonal work and who have now lost their job or who were holding out to find another job who have now been unable to find anything, neither of which are a good sign.
The rising number of people considered “underemployed”, i.e. who want to work more hours, is also a bad sign, someone who is working less hours than they want to no doubt has less money to spend. The number of people filling temporary jobs also increased perhaps showing that employers are unwilling to take on new contract staff and expect more bad times ahead.
Again the number of people who are economically inactive increased whilst a new record number of 16 and 17 year olds were unemployed which suggests that employers are continuing to allow people to retire without replacing them with new younger workers.
Perhaps the most worrying economic indicator towards a double dip though is the record government borrowing in January. I say record, but for the first time since records began the UK government have had to borrow money in January which is a terrible sign. Traditionally January is a very good income month for the government with VAT from increased Christmas sales, and income tax from the self employed. In total tax receipts were down 11.8% compared to last year meaning that the self employed and businesses have been hit hard. Either they haven’t made as much money in the past year as they did the previous year or in a potentially even worse situation they can’t afford to pay the tax they already owe. Neither situation is good news
Brown continues to tell us that we are best placed to come out of recession and that the recovery is fragile and any spending cuts will destroy it. In reality all the evidence seems to point either for us to double dip or that therecovery just hasn’t happened. The ONS have yet to revise the GDP growth statistics with full data and with indicators like this it won’t matter how much Brown prays for them to be revised upwards, I just can’t see how they will be.
Tuesday, January 26, 2010
What's a 0.1% increase - £6.79 per person
So we've got economic growth of 0.1% this quarter which means that GDP is 0.1% up this quarter over the last so what does that mean in terms of real increase.
I can only find our GDP in dollars (thanks ONS) so lets take the per capita figure that is the GDP per person in the UK. Using the 2008 estimates this is $43,785 which in today's exchange rates is £27,169.53 that is an annual figure so lets change that to a quarterly figure by dividing by four
GDP per capita per quarter = £6,792.38
and we've seen a 0.1% increase in that figure which equates to a per capita increase of, wait for it £6.79
Now obviously these figures aren't particularly accurate as they're 08 figures and GDP has fallen significantly since then (by 3.2% in fact) but they give you a general idea about how slowly we're coming out of this recession.
I can only find our GDP in dollars (thanks ONS) so lets take the per capita figure that is the GDP per person in the UK. Using the 2008 estimates this is $43,785 which in today's exchange rates is £27,169.53 that is an annual figure so lets change that to a quarterly figure by dividing by four
GDP per capita per quarter = £6,792.38
and we've seen a 0.1% increase in that figure which equates to a per capita increase of, wait for it £6.79
Now obviously these figures aren't particularly accurate as they're 08 figures and GDP has fallen significantly since then (by 3.2% in fact) but they give you a general idea about how slowly we're coming out of this recession.
We're out of the recession - Kind of
The ONS have released their prelimary GDP figures showing that GDP in the last quarter was up by 0.1%, mainly according to them due to increased output in distribution, hotels, restaurants and other services. In total output of the service industries increased by 0.1% and production industries by 0.1%, implying GDP decreases in other areas.
In all GDP on the year decreased by 3.2% between 2008 Q4 and 2009Q4.
Update: Further reading of the ONS release says that there were small decreases in business services and finance whilst construction, transport, storage and communication were flat over the quarter. Government and other services increase by 0.2%, mainly due to health spending.
Perhaps most worrying for Gordon Brown is that this is only an estimate based on 40% of data. The last estimates were I seem to recall revised down from 0.2% contraction to a 0.4% contraction, if we saw the same kind of revision then we'd actually still be in a recession.
In all GDP on the year decreased by 3.2% between 2008 Q4 and 2009Q4.
Update: Further reading of the ONS release says that there were small decreases in business services and finance whilst construction, transport, storage and communication were flat over the quarter. Government and other services increase by 0.2%, mainly due to health spending.
Perhaps most worrying for Gordon Brown is that this is only an estimate based on 40% of data. The last estimates were I seem to recall revised down from 0.2% contraction to a 0.4% contraction, if we saw the same kind of revision then we'd actually still be in a recession.
End of the Recession?
All the media outlets are reporting that the ONS is expected to tell us that we are out of the recession this quarter. Of course they were expected to tell us that at the end of last quarter which left a lot of bloggers, commentors nad newspaper editors looking quite red faced when the real stat of a 0.2% contraction came through.
Will that happen today? With Christmas included in the figures I doubt it, but just like with unemployment figures, Christmas is a temporary blip, and with all the sales having happened in December and January and consumers tightening their belts in January (not to mention tax being due for the self employed) are we likely to double dip?
Wednesday, January 13, 2010
The deficit and debt in pictures
I’ve blogged before about the national debt and the deficit (here and here) and mainly this has involved throwing around a lot of numbers and percentages. For those readers who are less number inclined, the Adam Smith Institute has produced a fantastic graph which covers from 2000 to the present and I’ve reproduced it below.
- Tax revenues as percentage of GDP are blue
- Public spending as percentage of GDP is red
- Public sector debt as percentage of GDP is purple
- The deficit as a percentage of GDP is green.
It shows two important points, the first is in 2001, when just after their second election victory it seems that the Labour party felt they had a mandate to apply their spend spend spend ideology and spending started to outstrip tax revenues (where the red and blue lines diverge). At this point the deficit sat around 4%. Don’t forget back then, the word recession was something from the past and no one had ever heard of a sub-prime loan or expected to have to bail out banks.
The second point is when the credit crunch and banking crisis hit properly and you see everything sky rocket, well except tax revenues which dipped, but don’t forget all of this is as a percentage of GDp so as that dipped too the actual tax receipts fell faster than the slope of the line suggests whilst spending and debt increased faster.
One interesting point that the Adam Smith Institute points out is that tax receipts have remained pretty steady at around 34% of GDP regardless of the situation (and interestingly despite increasing tax takes, changes in NI, the 10p tax band abolition etc) so that’s what a new incoming government should be aiming at. It won’t be easy though as at the moment public spending sits at around 48% of GDP, so we need a change of 14 percentage points.
- Tax revenues as percentage of GDP are blue
- Public spending as percentage of GDP is red
- Public sector debt as percentage of GDP is purple
- The deficit as a percentage of GDP is green.
It shows two important points, the first is in 2001, when just after their second election victory it seems that the Labour party felt they had a mandate to apply their spend spend spend ideology and spending started to outstrip tax revenues (where the red and blue lines diverge). At this point the deficit sat around 4%. Don’t forget back then, the word recession was something from the past and no one had ever heard of a sub-prime loan or expected to have to bail out banks.
The second point is when the credit crunch and banking crisis hit properly and you see everything sky rocket, well except tax revenues which dipped, but don’t forget all of this is as a percentage of GDp so as that dipped too the actual tax receipts fell faster than the slope of the line suggests whilst spending and debt increased faster.
One interesting point that the Adam Smith Institute points out is that tax receipts have remained pretty steady at around 34% of GDP regardless of the situation (and interestingly despite increasing tax takes, changes in NI, the 10p tax band abolition etc) so that’s what a new incoming government should be aiming at. It won’t be easy though as at the moment public spending sits at around 48% of GDP, so we need a change of 14 percentage points.
Subscribe to:
Posts (Atom)
