Good news on the way...BUT...
25 October 2012
...treat it with caution.
...treat it with caution.
Today (Thursday) it is expected that some decent growth figures will be announced signalling an end to the double dip recession.
Naturally the government will make a big play of it and what is good news for the government is bad news for Labour. They are certainly not looking forward to today.
But....
As I have previously pointed out the calculation of GDP is a flawed methodology in which the public sector adjustments have a disproportionate effect. Fortunately it is likely that this methodology will be downplaying the upwards movement in GDP rather than the other way around.
One swallow does not make a summer, but looking beyond the figures, or perhaps more deeply into other figures, there is no doubt that things are going the right way for the UK. The same cannot be said for the EU with France and Germany suffering from the Eurozone malaise. There can be no confidence in the long term recovery prospects of the UK and world economy until the Eurozone sorts itself out.
Yesterday I was speaking to a representative of a major and respected investment company at a seminar. Their economists are certain that some countries will need to quit the Euro and until then the crisis will just carry on. To quote the economist 'the Euro is doomed to failure'.
UPDATE: 12.30 Thursday
So the figure announced was 1% at the upper end of the estimates. It is clear that some one off factors are part of that 'bounce' but even without these there would still be an improvement. Remember, this almost certainly underestimates what is actually happening in the business world itself. No surprise that construction is the troubled sector, that is inevitable at the present time and is not being helped by new rules and regulations being brought in on mortgage lending, however well meant.
- Can I please asked why this has come on this page and not on his own blog,? I as a person have no wish to see it,and if I did I would log into his page. Thak you.
- It will be interesting to see how the Government adjusts the GDP calculations; however, we have to see if international institutions, such as the IMF or the EU, or even (back to Britain) the Bank of England, will continue using the traditional calculations to establish whether the UK economy is in growth or in recession.
Potentially we could see conflicting reports coming out, with Gov. saying one thing, and someone else another. For example, we could be at +0.5% growth according to the Coalition, and in a recession of -0.5% according to the EU. - The government, as such, do not adjust the GDP figures they are compiled by the ONS who are independent from government, hence the telling off DC got from the top-dog at the ONS...
You are not comparing like for like there Alexander. What you are referring to a growth forecasts which are made by a variety of organisations and all are different due to different forecasting models. That is different from the official growth figures produced by the ONS and are used by the other organisations like the IMF. - Quite interesting, Barry. As long as the Government is showing a will to live, and the Office for National Statistics can confirm it, then perhaps we'll start moving forward.