Tuesday, January 26, 2010

Not Out Of The Woods Yet

You really have to feel sorry for Gordon. He's spent billions of pounds of our money trying to get us out of recession, and yes, we've finally made it. Britain's economy grew by a massive, er, 0.1% in quarter 4 of 2009. This figure is so low that after adjustments, the economy could actually still be in recession.

Let's not split hairs though. It is good news that we are emerging from recession, even if we are the last major country to do so, and even if it has cost us far more than other countries to get to this point.

But the fact that it has taken so long should be a warning signal to everyone, rather than a clear sign of encouragement. It is a signal that internationally, people are still very nervous about the state of the British economy and are still not putting their money here? Why? Because they fear that our out of control government spending may well result in our triple A credit rating being reduced sooner rather than later.

We are not out of the woods yet, and I note an absence of Labour Ministers on our TV screens in the last 15 minutes crowing about their wonderful triumph. They would be well advised to remain silent.


Fenrir said...

Probably waiting for the saviour of the world to come and crow about his latest triumph.

Tapestry said...

In the PBR Darling confirmed that his April 2009 forecast for government revenues was on track at £498 billion. Yet the recession lasted another two quarters and maybe a third if this growth quarter is revised.

It will be interesting to see what government revenues are in the coming budget. £440 billion?

2008 April revenues were £606 billion.

Unknown said...

To be fair, the growth figure is always revised upwards when all the data are in. Today's figure is based on 40% of the data, and the services sector - much of which reports later - is likely to be doing better.

But it is still a long haul back. (Pedant's corner: the growth figures have nothing to do with the UK's credit rating, Iain. Soz!)

Anonymous said...

Losing the triple-A rating will make no difference - UK debt is already trading at spreads to German bunds that you'd expect from AA-rated bonds, so the market has already decided that we've lost it

Any Colour but Brown said...

In typical Labour fashion, anything that they can, however tenuously, attach the word "surplus" to, will be thrown out of the window on some pie-in-the-sky "fiscal policy".

Nash said...

What about feeling sorry for US (ie the people of the UK).

We have an unelected historian (PhD in Socialism in Scotland) spending OUR money (and grandchildren's money) irrationally in an attempt at getting himself elected.

Forge Lindin said...

Have just blogged about this - the election will be before corrections ;) so, what corrections?

I can't see how the growth figure would go down. have just blogged that I think this is part of why we'll see GE in feb/march.

I actually think economists should hold back from satisfying their desire for frantic press releases before releasing corrections months later. Do they not see the massive political and economic impact of premature press releases? Politicians and the country are subject to their predictions based on 40% of data if we're lucky. They should only publish if that 40% is pretty convincing. At least it seems that way to me.

miko said...

Brown will call an election this week - he knows the 0.1% is a slap in the face and even his mendacity will have trouble with these figures.

There is no way this shower will wait until May.

Anonymous said...


Utterly laughable

caw rock said...

To get out you need three positive quarters in succession, same as getting in. That is the basic rule which is only changed where and when it suits the speaker.

javelin said...

Page 3 of the report lays bare

Government grew by 0.4% in the last quarter.

Hotels by 0.5% - due to the weak pound.

If the Government had not carried on spending we would still be in recession.


Ean Craigie said...

johnwilliam no it is not always revised up it can go dowm and with the figure being in the margin of error down I think it will go. Without the scrappage scheme it would be worse and wil be next month and quarter. Jonah and Mandy hav playe us into a double dip and there goes the AAAA. I think he is making the Haiti case for us, so much in debt it will take a long time to put the economy back together so they should forgive us a billion or two

Unsworth said...

And China's growth is 9%.

We're nowhere near out of recession. This is one quarter's figure, based on growth over the previous quarter. The Annual growth is negative - approximately -3.5%. And there are several factors which distort the reality viz car scrappage, public sector growth, etc etc.

This is based on a 40% sample of figures anyway. The real growth figure is still not known. It may go up or down, so should carry a health warning - as should the toxic Brown.

Even if you believe this wild optimism, are we still 'best placed' to come out of recession - the last of the G20 to do so? There's a mountain to climb, and Brown is no effing Sherpa. Would you rely on him?

Tapestry said...

Britain's US$ GDP doubled between 2001 and 2007. It has fallen 30% in 2008 and 2009.

If the £ falls again and the recession double dips, Britain might yet rediscover the $GDP of 2001, and halve our US$ GDP over five years, from near US$3 trillion to $1.5.

The boom was all based on 'financial services' and a surge in debt.

See UK US$ GDP chart from 1960 to now HERE.

The savings ratio in the UK is now 8.6%, up from 0% in 2007. Growth is going to very hard to achieve while we shake off the vast debts from the Brown mega-boom.

Unknown said...

Brown is bound to try and capitalize on this as "his" achievement - when we all know the truth is we are in recession because of him, not despite.

Let's see how Brown tries to spin this - expect plenty of "talking down Britain" aimed at the Tories.

One thing - it kills off any chance of an early election.

neil craig said...

0.1% is a suspicious figure, even moreso since there is exactly the same 0,1% increase in both manufacturing & services.

The economy is also now 10% less than it could have been.

And what we have achieved has been done by borrowing 12.5% of GNP. Take that away, as must in time happen & ...

However worst of all is to compare this with the 10.7% growth China is now achieving. http://topnews.co.uk/22127-china-sees-rise-gdp-and-cpi

I hope that for once the Conservatives will make that comparison. We could have 10.7% growth too if it were not for Luddist regulations destroying 50% of our economic potential & government spending eating 50% of what remains.

javelin said...

Tapestry ... Well said

Mega-boom, Mega-bust

Guthrum said...

It is a vast improvement on '0% growth' he was projecting

w/v polop

Anonymous said...

I appreciate the sarcasm, but I feel nothing but contempt for Brown, not sorrow.

This is quite a strange response, you know. I did not feel such contempt for Blair or Kinnock or even Foot. Nor Callaghan or Wilson. Wilson was a cheeky chappie, somewhat transparent to me and ended up a faded Archie Rice character. But Brown is something different altogether.

These so called growth figures are hopelessly bad news for US, the people. The feelings of Brown are totally irrelevant to me.

1001 Saudi nights said...

The only reason that there was any growth at all (& I would be very interested to know what the figure was that was rounded up/down to 0.1%) was because of the car sprappage scheme which made the motor industry grow with the help of our money obviously! You have to laugh - the Govt were obviously expecting better figures otherwise why the press conference to announce them (they don't usually bother!)Yet again Brown and his henchmen have got there forecasts completely wrong & to think that yesterday he was, yet again, telling us how he brilliant he is and how only he has the answers to save the economy. All we have to look forward to now is a double dip recession.

Twig said...

There's a mountain to climb, and Brown is no effing Sherpa. Would you rely on him?


Unknown said...

The only good thing about this pathetic figure is that it means that we will probably have a March election.

Anonymous said...

brown should call an early election - he can play it purely on the argument that recovery is weak and that if you let those nasty tories get their hands on it and cut immediately we will stay in recession.

he needs to do it before figures are revised and before he has to do a budget.

liam byrne on DP now playing the card that tories will = double dip.

View from the Solent said...

"You really have to feel sorry for Gordon."
Whaaaat? Never. in. a. million. years. Whatever the circumstances.

Kiki said...

well if growth is predicted at 0% in the future then 0.1% would be brilliant! (not).

really Iain, I predict a March election. Double dip ahead this recovery is far from over - March election and then blame the tories for the second dip!

javelin said...

Japan has been given a warning to cut spending by S&P today or it will lose its AAA rating. The markets are starting to feel that Governments around the world are in a state of denial. standard of living must fall and Goverments have been spoilt. Rating agencies will cut Government ratings as a last resort. I think the feeling is that several Governments are nearing that point.

John said...

Why is there no Tory Minister on The Policts Show?

Martin said...

Sorry Iain but you should really listen to the BBC. "It's a glorious day for the great leader, the BBC will be celebrating by playing marching music all day with on screen scenes of the great leaders achievement"

So there you go. Bloody Tories.

Anonymous said...

Doesn't Japan have an AA rating, rather than an AAA rating? I must say that it is teeth-grindingly embarrassing to be a Scot living in the same era as Brown, Darling and the rest of the McFraggle Rock Labour contingent. Even the Bay City Rollers weren't as embarrassing as these Caledonian clowns - although their long-term finances were probably just as bad.

Anonymous said...

cutting to early will not help us,it will increase interest rates and cut jobs.

Scary Biscuits said...

Let's not split hairs though. It is good news that we are emerging from recession.

Er, we're not emerging from recession - at least not according to these figures. 0.1 is less than the error margin on the figures so it is a statistical zero. When you factor in distorting, temporary effects such as extra government spending, scrappage schemes and printing money, the true figure is probably way below zero. That is, we are still in a BIG recession and this isn't even reliable evidence that we are past the nadir, even of GDP growth let alone jobs. (Even in the property crash of the 80s there were some months with positive figures. One swallow doesn't make a summer etc.) It shows how desparate Brown is to be clutching at straws like this.

Richard said...

Well over on LabourList they are claiming the UK is out of recession. Seems they don't know that you have to have 3 successive quarters of growth to claim that.

Had they said the UK seems to be on it's way out of recession then they might have had more of a point

Anonymous said...

'we have a mountain to climb'

Brown is no Hillary, Darling is no Tensing and the cabinet are no gang of Sherpas.

Indeed if we wish to persist with a mountaineering analogy we are more in the position of being led out of recession with the same sense of direction as Monty Python and their ascent of the twin peaks of Mount Kilimanjaro.


PS - there has just been a kind of 'he would say that wouldn't he' moment in the Iraq Inquiry. Poor jack Straw.

Unsworth said...

@ John

Why is there no Tory Minister at all?

Still, not long now.

Anonymous said...

It never ceases to amze me how the politicians keep saying what we the public want, think and believe. This is what i want in no particular order.

1. Small government
2. Schools that teach our children to read and write and communicate
3. Police that protect the ordinary law abiding citizen
4. Abolision of political correctness
5. Removal of nudity and obscene pictures in the press and before the watershed.
6. No more forms with questions about ethnicity. (why should it matter)
7. Politicians who dont lie.
8. Affordable housing
9. End of the something for nothing culture.
10. The goverment to say its proud of our history and traditions and culture and stop trying to put other alien cultures first.
11. true free speech.
12. An end to council jobsworths
13. NO bank charges
14. An honest debate about immigration that is not highjacked by the your Racist Marxists
15. Lower direct taxes
16. Higher indirect taxes on spending
17. More street paties
18. free detal treatment for all
19. End to the human rights act
20. a Citizens charter
21. absolute rite to protect yourself in you own home.
22. More thought about responsibilities and acceptance that rights come at a price.
23. Harriet harmen to be deselected
24. peter mandelson to go back into the dark hole he crawled out of.
25. An ignorance of colour and race in society.
26. close the equalities commission.

bill said...

Hold old Iain, good news? Do the sums:

0.1% of GDP = £3 billion
"QE" = £250 billion
Bailouts = say £250 billion

If GDP grew 10% it still would not have been worth it.

Next time you prang your car with £100 worth of damage, take out £50,000 on your credit card, fix your car, set fire to the other £49,900, and then ask yourself was today a good news day?


Alan Douglas said...

Iain, I have to take issue with you about this : "You really have to feel sorry for Gordon."

I feel sorry for HIS victims, which is basically the entire nation, who will be paying for his crimes for 30 - 50 years

Sorry, complete sense of humour failure here !

Alan Douglas

Alan Douglas said...

Taking the airplane analogy even further, the UK is now like the film "Survival", in which the survivors eventually start to cannibalise the frozen dead around them. Not unlike spending our great-grand-children's money to get re-elected now ?

Alan Douglas

Village Bookworm said...

Iain, We remember the BBC's coverage of the recessions under a Tory Government.
It was a constant theme them from the [utterly unbiased] BBC Economics and Business Editor - Peter Jay that we would not be out of recession until we had made up the growth we had lost. There seems to be a different set of rules for Labour.

Goodwin said...

0.1% could easily be a rounding error in either direction and in itself is insufficient to show we are out of recession. Just more spin.

Roger Thornhill said...

Not only are we not out of the woods, but we are up to our necks in it and the Labour bear is again assuming the position right over the taxpayers' head.

Kingbingo said...

"You really have to feel sorry for Gordon."

Oh no I bloody well don't!

"He's spent billions of pounds of our money"