Friday, April 23, 2010

Growth Figures Should Be Better

The 0.2% growth in GDP in the last quarter is certainly nothing to write home about. Indeed, it is rather depressing that after all the money the government has pumped in, this is the best they can do. Of course, these figures are constantly revised, and although in recent months the revision has always been upwards, it is entirely possible that the opposite could happen and that we could find out that we are embarking on a double dip recession.

Brown will no doubt use this as further evidence that no money should be taken out of the economy for fear of growth being further affected. His trouble is that no one really believes any longer that it isn't possible to save £1 out of every £100 the government spends.


Tapestry said...

Why look at GDP figures which are pretty theoretical. Greater government spending is added to the total of GDP even if 100% is borrowed.

Look at cash revenues..if yu can.

The revenue, spending and borrowing figures are so heavily manipulated it is impossible to get a simple read. All you can say is that government revenues fell from over GBP600 billion in 2008 to under GBP500 billion in 2009 (the last year they might have been given honestly) and were probably about GBP440 billion to April 2010.

In other words revenues are down more than 25% in two years. Unprecedented. And unreported.

Boo said...

So we have added £160, 000, 000 to the national debt, and all we got was 0.2%

Stellar work there Gord

Will said...

Also, cutting tax is NOT taking money out of the economy. It's leaving it in the economy!
It annoys me every time he says this and nobody corrects him.

Dave needs to nail Brown on this one in the next debate.

Martin said...

Can someone explain to me what "the economy" is? I'd have thought leaving that £6bn NI tax in the private sector for companies to invest in jobs, and for individual families to spend, would be far better for "the economy" rather than giving it to Gordon Brown to waste on consultants, NHS middle managers, failed government IT, and MP and Civil Service gold plated pensions?

How does spending more on the unproductive public sector help improve the deficit?

Alex said...

I am surprised that wise heads in the Conservative Party haven't made more of this. The 0.2% "growth" in GDP is entirely due to government spending, but GDP growth shouldn't be an end in itself. The important measure should be the level of economic activity excluding government stimulus.

As the NIESR has just reported, growth was higher between 1979 and 1997 (2.5%) than between 1997 and 2010 (2%), and that was without any stimulus.

If you allow for the 14% of GDP that is paid for with borrowed money (and that ignores the similar impact of PFI/PPP), then the economy is clearly up a creek with no paddle.

Sean said...

We spend too much time getting caught up with data that is unrealistically precise, but not necessarily accurate.

If the economy grew by 0.2% or for that matter shrank by 0.2%, the message is it was flat.

It's the same with opinion polls: a change of 2% is within the margin of error and shouldn't be cause for somment, although too often it is.

Sadly, much of the commentariat is statistically illiterate.

The King of Wrong said...

@Boo: no, be fair... We've blown £160bn in borrowed money to get a drop in the economy: -0.3% from Q1 2009 to Q1 2010.

Mick Turatian said...

Brown will no doubt use this as further evidence that no money should be taken out of the economy

Why repeat this nonsense as though it had some legitimacy? G is not "the economy" for heaven's sake.

Jess The Dog said...

Not surprising...service sector gva is in decline, and that's the major part of the economy. Borrowing figures out earlier this week are horrifying at more than 60% of gdp...what is worst of all is the fact the bank bailouts are a relatively small component! The country is utterly stuffed no matter who wins...the only difference is who gets squeezed the most to pay for all this...the productive classes and wealth creators, or the state and its client classes.

Lola said...

It seems that people might also be gradually waking up to the Big Lie that cuts take money out of the economy. It's a classic Brownie, being the direct obverse of the truth.

Nigel said...

Got to agree with what Will said.

Refusing to increase NI is not "taking money out of the economy". If anything, it's quite the opposite.

Unknown said...

I agree Will.

It says a lot about the quality of journalism in this country that they just repeat this claim by Labour.

The £6 billion being 'taken out of the economy' is a load of the old proverbial.

All it is doing is transferring money from the private sector (mainly - public sector employers also pay it) and moving it to the government.

I think it would be better used in the private sector.

Jimmy said...

"Brown will no doubt use this as further evidence that no money should be taken out of the economy for fear of growth being further affected."

And your argument is that it isn't?

wild said...

You "Tories" are forgetting that in a Socialist State it is the party line not the economic reality that counts - even the tractor statistics will be largely made up.

Socialism is not (and never has been) about improving living standards - except for an elite that tax farms the serfs in the name of the collective.

It is about redistributing power (in the name of the people) to ladies and gentlemen whose overpowering sense of entitlement drives them to hate (and seek to diminish) anybody more successful themselves.

Cynic said...

Just seen Gordon on the BBC. Apparently it would have been much higher but "IT WAS THE SNOW WOT DONE DONE IT"

Well, bugger me. Why didn't I realise that before and there's a pattern here Snow drive economy down, Volcano shambles ........... yes folks, it's all God's fault. You can see the Mirror headline tomorrow


Martin said...

I'm sure this has been mentioned before, but, as we know the NHS is the largest employer in Europe for some reason, the employers NI contributions must be significant.

So when Brown raises NI, where does the extra money for the NHS payroll come from? Existing budgets? So less to spend on patient care?

Anonymous said...

Why do so many people, even though they argue against it, allow the myth that is 'taking money out of the economy' to go unchallenged? The State is not the economy. The State has nothing except what it levies in tax. The economy is the wealth-creating enterprises, big & small, that drive it. Tax is taking money out of the economy, reducing tax & wasteful State expenditure is not.

Spenny said...


No wonder I'm an atheist.

The Secret Person said...

Will and Martin are right, how is a tax cut taking money out of the economy?

After all, the largest part of Labour's stimulus plan was the VAT tax cut.

Dave has been useless here, unless he's been saving it for the last debate. Surely all he has to do is explain, in simple language (I could write it for him if he needs help) how a tax cut doesn't take money out of the economy. Forget about 'waste' and 'jobs tax'. Do it in the Economy Debate and do it early. Gordon can't think on his feet he'll keep repeating his one flawed argument and look stupid.

Surely Iain you have the contacts to pass on this hint. Now all you need is a way to take out Cleggy.