Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Over the weekend I read an interesting article by Lord Bates about the UK economy and about how the GDP figures are complied.
Just how many of us know what exactly we are talking or reading about in respect of GDP and how the figures are put together? I suspect very few of us and I was prompted to look into this further.
GDP was developed as a way of measuring activity in the economy in the 1930's and is based on data from: 6,000 manufacturing companies, 25,000 service companies, 5,000 retailers, 10,000 construction companies and figures on government spending. The GDP figure is based on just 40% of the data and has a margin of error of 1%.
Imports are excluded from the figures but imports, whether of raw materials or consumer goods, are themselves a significant indicator of economic activity.
Government spending is now so high and supported only by a massive deficit that it must be reduced to reduce the burden carried by private sector businesses. Reductions in government spending are therefore distorting the overall GDP figures disproportionally.
Essentially GDP is a very flawed measure. Taken alone it can be self-fulfilling in creating the conditions for recession. There are many indicators that show this to be the case. Let us look at a few:
1/ Businesses are sitting on a pile of cash, £750bn in all, a record amount. This is because of a lack of confidence in the economy. Partly the GDP figures and, of course, partly the Eurozone crisis causing this lack of confidence. Companies have been holding on to reserves and not investing, holding money in reserve to see them through the hard times that they expect to hit them at any minute.
2/ Regardless of the above business start-ups last year were 471,466 while there were 16,621 insolvencies, in other words a net growth of 454,845 enterprises. These are the best figures we have had for decades.
3/ Unemployment has fallen for each of the last 5 months against a background of a 0.5% drop in GDP. 201,000 more people are now in employment in the UK during the quarter in which GDP fell by 0.5%. In all there are 634,000 more people employed in the UK economy since April 2010.
4/ Exports reached £39.2billion in June. That is close to the all-time record which was itself achieved in November 2011. Exports to China are up 74%, India 94% and Russia 100% all in the past year. For the first time since the 1970's the UK is a net exporter of cars.
5/ Industrial Output rose by 2.9% in June, the fastest rate for 25 years. Manufacturing output rose by 3.3% - the fastest for over 10 years.
Other signs of recovery include inflation up, to 2.9% in July and even house prices have started to rise.
Lets be clear - economic conditions remain very tough and we need more effort to boost business to instil confidence and to get growth. More must be done to deal with the deficit by reducing public spending faster and reducing the burdens on business. The recovery is happening, it is fragile and must be nurtured but it is not all bad news as the media would have us believe.
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
..........and on planet earth we are in one hell of a mess......
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
The facts are the facts but of course you are not interested in the facts because it spoils your personal agenda.
I have given a lot of facts there and you cannot dispute them with facts.
I work in the real world of business and advise many businesses and business people. I am at least in the real world.
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
.....define recovery.......
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Improved economic activity.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
The facts are the facts...how true.
1/"Businesses are sitting on a pile of cash, £750bn in all" this is where that 'fact' ends.
2/"These are the best figures we have had for decades." 'Figures' are the poor relative of Facts.
3/"Unemployment has fallen for each of the last 5 months..." If only this actually meant that more were in full-time work, but this is not the case.
4/All good to hear, yet all are increases from a very low base. "UK is a net exporter of cars" this must be derived separately from GDP figures, as they (so it is said) do not include imports.
5/ I am upon the horns of a dilemma;Should this and the rest of #1 be to a Carl Orf or E Elgar tune?
We can all suppose that the winner of the two-thirty at Goodwood got past the post only because cripples are being evicted and workers are more easily let-go.
Might there be a 'cunning plan' to hire more workers at a time when Government statistics are being drawn-up?
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
Wish we had some....no improved economic activity for 2 and a half years...
...it is 4 % below 2008....it is in reverse due to Plan `A`......OECD forecast is minus
0.7 % in 2012...facts are facts and reality is reality....we are in a mess and our
government is in a mess and dithering.....changing planning regulations to allow the
building of extensions is fiddling at the edges.....
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
Barry, there is unfortunately a ...erm... fact, that possibly by-passed you while you were intent on reading the article over the weekend.
The Government's prevision for GDP for the third quarter of this year has been slashed by 1.2%, following the statement of a French economy analyst group - dash forgot their name.
It will be a treble-dip recession!
Facts can be the biggest ...fibbers
Guest 640- Registered: 21 Apr 2007
- Posts: 7,819
I'm afraid Brendan Barber is failing to see a recovering economy. The union leader was on the lunchtime news bemoaning the state of everything and longing for some growth. What the Coalition government is doing and has been doing over the past two and a half years just isnt working...said he. He called for more investment and more across the board building to get people working.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Oh what joy some people greet good news with - the usual suspects who want everything to go wrong.
PaulB - Brendan Barber. I wondered for a moment who that was, then of course it clicked as I read further, a trade union rep - another person wishing the economy down the drain for selfish ideological reasons. You hardly expect him to see anything right do you?
The point of this thread is to show that GDP is a faulty measure and is not reflecting what is happening in the real economy where it really counts, in business.
Ignoring the inconvenient facts and evidence of good news and faulty GDP methodology is not going to win any debate.
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
With a treble-dip recession it's convenient to say that, Barry.
But if we had had a 2.5% GDP growth, bet you would have explained how this was ...fact!
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Faulty methodology is faulty regardless of what figures you are getting. I have explained and quoted evidence to support why the GDP figures are faulty.
Brian Dixon
- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
a bit like the preasnt goverment.hand back to the pheasants who know what they are doing.
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
Peasants, Brian!
Brian Dixon- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
thats the one alex,peasnts the so called hard working no nothings.
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
I'm off to get 8 cans of cider, Brian. They will last me 8 days.
That's the real economy doing well.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
brendan barber has to do his best for his members, after all their dues pay his wages.
he made clear his view that lack of investment was holding the jobs market back and blamed the chancellor for not doing enough to encourage investment.
Guest 703- Registered: 30 Jul 2010
- Posts: 2,096
Tell us Alex, what brand are you going for, hope it's a good British make and not some international conglomerate
Guest 745- Registered: 27 Mar 2012
- Posts: 3,370
That's good news Barry ,
just think what we could do if we could ditch the EU.
And stop all those big company tax loop-holes, draining the economy, we could slash borrowing.
And we could slash vat, and help small business, grow the economy
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Do not mix up the economy with tax revenues Keith. Government spending and taxation are a problem and you do not solve either with more of the same.
The EU is indeed a menace but we must quit 'in the right way' that does not affect our trade. The best way to help small businesses is the slashing of red tape.
The taxes that do most economic damage are those on income, either corporate or individual.