Growth, of sorts

This statistic is not a recovery; it is Christmas shopping!

How many more times must I have to say this?

If you look at the amount the economy “grew” in £ then subtract the amount £ of “quantative easing” then we are still in negative territory.

Or if you remove the effect of inflation over the period we are still in negative territory.

So to make the growth figures look even better the government just needs to print even more money or wait for more inflation.

Its growth Jim, but not as we know it.

What a pathetic spectacle the UK (& US) economies present. All they can manage to scratch together are paltry levels of 'cash for clunkers' growth after pumping in trillions in stimuli, bailouts and general subsidies. This does not bode well for the real state of these economies when the stimulus measures have to be wound-down. Double-dip anyone?

Had the (reported) growth been strong there would be no case for continuing with QE on Feb 4.
With the weak growth the government can say 'look, we know what we are doing, trust us' and go ahead with £25bn QE which will give them a nice war chest for the election.

The question none of them will want asked is 'is it real growth ?' ie. non-stimulated.

just off to sign on exspect there will now be hundreds of jobs to choose from as we are back into growth.back to reality still looks like bankruptcy will be my only option as i fear we are only at the start of a very long depression.

What growth ??

Yeah I did buy something just before VAT went up again. But I've paid for it (you know money saved up)

Errrh I even managed to take a holiday this month (the first in over 25 months), but the next will be at least another 14 months away and I am already trying to work out how to scrimp enough from the family budget to pay for it.

I've needed to go back to work to make the family budget balance again.

We are unable to put money into savings accounts for any other rainy day (apart from the one hoiday), contributions for pensions we are always being encouraged to make (we dont have enough of a surplus) and a takeaway Pizza or Fish n chip meal that we can remember would give more long term gratification at present.

I am sitting in the usual hypothermic house debating whether I should put a third jumper on. I suppose if I leave the computer and do something active again for the next 30 mins and ignore the news I might just feel less cynical about being middle class and taxed to extinction.


SORRY.

I'd call it survival on basics not recovery.

Hi Stephanie

These are very weak figures are they not? I wonder if all the economists you talk about are wondering if they have made a mistake as it is very easy to continually criticise the Office of National Statistics.I have read on https://notayesmanseconomics.wordpress.com that QE is looking an expensive policy failure in the light of the figures we have received in recent times. Perhaps it has been a mistake...

The question, as several people have asked before, is where is the growth going to come from?

The government seems to favour a mix of loose monetary policy and prayer. The conservatives, as far as I can work out, seem to have decided that it isn't going to come from anywhere, so we need to shrink the size of UK plc to reflect our new reduced circumstances.

Both rather depressing points of view.

It is now quite clear that while monetary policy has probably stopped the economy going of a cliff, it hasn't yet provided any impetus for growth. And in the absence of any clear location for that growth - the mythical and undetecable 'spare capacity' that Vince Cable mentioned yesterday - I see no reason why it should.

Hopefully the govt will see this and will not loosen any further, before the damage (to savers, building societies and potentially the currency) get too great.

As for the election, if any of them start talking about energy security, investment in innovation or how we can address our balance of trade then I might start listening.

Tory clamp down - no it is slash and burn. Cameron has made a major mistake by thinking that few public sector people occupy the middle ground. The government on the other hand will not take charge of the economy and think only of MPC and QE when what is needed is direct management and stimulus of public works and boosting benefits in advance of several annual upratings. The absurd levels of interest rate will not cure the condition of people living well beyond their means and there will be a day of reckoning - may be induced by a stirling crisis!

I wonder how much of the retail spending over Christmas and the New Year was due to tourists from Europe taking advantage of the sales and dirt cheap Sterling.

I get the feeling that a lot of Europeans are funding breaks in the UK with cheap shopping.

Now where did all the QE money go to? It was pumped into share prices, something that add absolutely nothing to the economy.

Gordon Brown must be feeling very much like so many of us in the UK, waiting for a bus and wondering when it will come. If the NAO revise their figures down things could get interesting.

In other news, I just spent £10,000 on my credit card, so my net income went up by £10,000 this year. That's how it works, right?

I think it is fair to say that these latest figures prove, beyond any doubt, that the UK is the best positioned af all the G20 countries.

Best positioned, that is, to stay right at the bottom of the barrel.

as an experienced retail manager, and working in such a visible indicator of consumer confidence and mood, i have seen no evidence of the VAT cut having any impact either way, not until you at least start to review spending on big ticket items...
so maybe ppl did pull car buying forward...(with scrappage also incentivising)..and maybe some electrical purchases..
but on the whole apart from in the media, ive not noticed the average consumer talking about it- when prices went down, nothing happened to my sales...and now its gone back up- not one customer has asked me about it no change- we are still growing on year.
if anything talk of any recovery may bolster confidence on many business sector levels, which will become self fulfilling as time goes on.
its unfortunate any recovery must take place against the back drop of a general election as decisions will be delayed and facts skewed for political agendas.
its eye opening how little this recession has impacted on lifestyles when you look at the drop in output...esp when compared to previous 'non stimualted' recessions
while the nation of armchair economists sit in their warm houses, with wireless internet, and big TVs bemoaning the state of the nation, be thankful it didnt get any worse...
by the heady heights of 2007, we were wealthier than we had ever been- so where are we now?...back to 2005?...

I'm sorry, you can bang on about revisions etc until you're blue in the face but the reality is that this figure is comparable to al the other "first estimates" and is BAD NEWS for those who would talk up the recovery.

More importantly, however hard you try to spin the bad news away the truth is that the economic performance is far more consistent with the more pessimistic assessment, popular among posters on these blogs, than with the Panglossian forecasts that promise that, however bad things get, they will get better shortly.

Like all the doomsayers during the boom, they will be proved right one day. But not yet!

I tend to agree with much of posts 1 and 6 in that I imagine much of this negligible growth, which could be downgraded as well as being increased lets remember, is due to both Christmas shopping and spending brought forward to beat the VAT rise.

After all you couldn't move on commercial TV in December imploring people to spend money in sales before the VAT went back up.

I expect a dip this month as this forward spending is not repeated. When the car scappage scheme runs out of money soon expect the motor industry to dip yet again.

Like post 6 I am in the put a jumper on school when it comes to the cold. I expect to be stung by increased taxes and National Insurance come April and not being a banker I'm not expecting either a huge bonus or a massive pay rise. Money is much tighter than it was and I can't see when it will be any freer.

I imagine that in this I am joined by the majority of your readers.

its great we are out of recession....now lets look st some hard facts,
vat cut, all time low interest rate cut, stamp duty increase, massive government borrowing, car scrappage, and all this to make a return of %0.1 dosent sound like a anything to celebrate and it will be short lived

Now what do you think will happen next...lets look at some hard facts

1 VAT increase back to 17.5 (poss increase to %20)
2 Stamp duty back down to 125k
3 car scarappage WILL end
4 interest rates will rise (very soon)
5 government are broke

i honestly think that most econamists dont have a clue

0.1% growth despite Christmas and the expected surge in sales to beat the VAT hike? Some economist said recently that it was likely that all the government had done was to suck spending from Q1 2010 into Q4 2009, this has serious political and electoral implications for Brown. If as expected he goes for a May 6th GE then the Q1 2010 GDP figures, which will be relaeased just a week before polling day, could possibly show a return to negative growth. It's often speculated that it was a set of surprisingly bad balance of payments figures that did for Wilson in 1970. The big difference is that Wilson was on course to win a majority then whereas Brown is trying to minimze the defeat!

I read this and nearly wet myself.

Well sorry to disappoint you all but clearly journalists, politicians and the general public are being misled - the 'experts' are confusing a Keynesian demand boost with a sign of real growth.

Here is the maths:

In 2008 the UK GDP was $2,680 Billion

In 2009 we printed £200 Billion ($322 Billion) (I used today's rate)

$322 Billion represents 12.01% of GDP

This was added to the Economy in 2009.

In the 3rd Quarter we 'touched' 0.1% growth - even though at a minimum we should have grown our wealth by 12% (because GDP is merely the monetary value of the Economy in a year)

The reason this is allowed is because this increase in GDP is offset by the fall in sterling to balance it out.

This gives you an idea of the scale of the collapse and how this figure of growth is actually the most tragic thing pounced on by eager politicans and not questioned by journalists.

I mean if you earn £50,000 a year and I gave you an extra 'counterfeit' £6000 and you ended up the year 'growing' your income by only 0.1% - wouldn't you be worried about your debt / earnings ratio - especially when I won't be there to add the extra £6000 next year.

Is this what we call investigative journalism? It seems like a total whitewash of the stupid to me....

Are we ready with those 'double dip' lies yet?

Whatever your politics, this is extremely worrying.

I cannot stand this government, but after they had borrowed such vast amounts on my behalf to prop up the banks and the economy, I hoped something good would come of it. (I didn't expect much, but I hoped I was wrong.)

They've wrecked my company's final salary pension scheme, and my company is now pensioning me off early. My savings are earning almost nothing because the government are keeping rates low to prevent default by those who've overstretched themselves. My saved pounds have lost a quarter of their value, and I fear they will lose even more as inflation takes off. And still the economy is stagnating.

I pity George Osborne, but anybody, anybody must be able to do better than these losers.

Roll on May 7th.

No boom, just bust.


So borrowing 3.5 billion pounds a week has brought the UK no growth:

- public services growth of 0.2% contributed to 0.1% total serivces growth

- car scrappage scheme

- it's 4th quarter 2009 on 3rd quarter 2009, so helped by back-to-school let's get business going again quarter with christmas shopping, including VAT-hike pre-empting, versus sleepy summer

- 0.1% can be 0.06% rounded up (or, admittedly, 0.14% rounded down)

PS GDP is now 6% lower than a while ago, with government accounting for 50% of the economy it seems that private sector has shrunk more than 10%. The tax base is shrinking fast.

PS2 Now that it's odds-on the Q1 growth figure will disappont (VAT rise anyone?), it's also odds-on that the election will be in March, conveniently helping the government to escape publishing a new budget and before other tax hikes come into effect.

As my business is struggling like many others, I have just had the phone call with the Inland Revenue regarding my January payment.

I expected a barrage of opposition to my assertions that I have not taken a wage for 9 months and anticipated that the tax to pay was too high.

Not a bit of it - there was just a resigned acceptance of the fact. Presumably the Tax man has had to deal with thousands of the same calls in the past few weeks.

Extend and pretend or delay and pray. Same in the Inland Revenue it seems, along with Commercial Real Estate, Business loans and everything else.

All this pumping with interest rates at 200 year lows and we get 0.1% after 18 months!

I will buy a drink for the first journalist who has the courage to come out and admit that this is a DEPRESSION.

Come on Steph, you could easily beat Pesto to it!

The Joke of them all is the BBC Headline !!!!!!!!!! Electioneering ?
As for Darlin ! Pinnocio and Flying Pigs spring to mind.

Stephanie

Has anyone quantified the loss of earnings and economic productivity due to the bad weather earlier this month? The home counties were hit very badly for the people who are reliant on driving to work, as most of the small roads which they live on were impassable. The usual refrain is two weeks lost wages.

Therefore the Q1 2010 figure may well show a double dip, not withstanding the poor economic situation.

Strange recession. not much unemployment, houses and share prices have been increasing for a year, many of us just a bit poorer, looking at increased taxes ahead. So nothing to 'bounce back' from really. Just a slow crawl out of the pit. I know several people who are leaving the country, just because there are better opportunities elsewhere. What we need at this stage is a charismatic leader to drag us out of all this, but nothing on the horizon. So,like the poor people of Haiti, it's down to us to help ourselves. Grow our businesses, find jobs. Hope it's a good summer.

Having to rely for an exceedingly weak recovery on a foreign owned automotive sector subsidised by the taxpayer sums up the state of Labour's economy perfectly.

Billions pumped in, historic low interest rates, VAT reduced, endless schemes invented to prop up failing industries and all for 0.1% growth.

That's what I call great economic results for Alistair Stalin and Gordon Clown.

Many posters keep harping on about low interest rates. Where are they then, my mortgage rate is a standard variable courtesy of a predominantly public owned bank and I'm being charged 4.10%.

The BoE base rate no longer has any influence on rates charged by lenders and any rise will be detrimental to the (supposed) recovery, any rise in rates would be used by lenders to fill their pockets even more. Don't commentators realise a raise in the BoE interest rate is a form of QE, it creates money from nothing but only for the lenders benefit.

Also, rates will never be allowed to rise more than around 2% because of the differentials now being charged by banks to address their balance sheet issues, a rise above this would plunge the economy into freefall. The £ would rise in value - great - but no one would have any.

Why are all the economic experts the BBC consults over-optimistic and ultimately all proven wrong?

Anything to do with an election in March?

Anyway I thought it took two quarters of figures to decide if you were going into or coming out of a recession.

This comment was removed because the moderators found it broke the house rules. Explain.

We are currently being propped up by quantitative easing and low interest rates, whilst still producing next to no growth. I don't see anything but a long drawn out struggle as per the early to mid 90's.

When the cut backs start later in the year we could be back in recession.

Fantastic, and all it has cost us is record borrowing, zero percent interest rates and heating up the printing presses. Things would have been even better if only we had done more of everything. Economic nirvana - in a cosy little club, just us and Zimbabwe, well done Gordon.

Where do you find all of these economic experts? I didn't spend extra, or rush through any major capital purchases, because of the VAT change: I have continued to spend and save in the same way that I always have but have been mindful to ensure I have 6 months worth of mortgage payments put by, just in case.
The company that I work for, having cut 30% of the workforce in June is recruiting skilled staff in January: not in anticipation of an upturn but because we do not have enough staff to manage the order book we currently have. I know there are a lot of companies in the IT sector following the same trajectory. People only spend on IT when they can afford it or when they have no choice - so my view of the economy is that business is beginning to think ahead and to stop the navel gazing and Jeremiah wailings of the posters to your blog.
I am not interested in quantitative easing: it is a fiscal measure for supposed fiscal stimulus: and is largely irrelevant to all but the banking sector. It is not even paper money - it is digits on a computer. I am concerned about Tory slash and burn policies as they will be catastrophic for ordinary people and the only thing I will say for the government is that their every prediction - including when we will come out of recession - has so far proved accurate: they always predicted a fourth quarter return to growth and not earlier.
PS Is it correct that the current estimate is based only on 40% of the actual figures, hence the subsequent revisions?

27. At 12:32pm on 26 Jan 2010, NorthSeaHalibut wrote:

"Many posters keep harping on about low interest rates. Where are they then, my mortgage rate is a standard variable courtesy of a predominantly public owned bank and I'm being charged 4.10%."

...this is merely the self-choking greed which our Economy is going to suffer - I mean where did you think all these bonuses came from?

In addition to this, the spread between LIBOR, BoE and 'lowest mortgage rate' is huge - possibly an all time high.

This is not through choice in some cases - this is through desperation. Some banks are still living on the edge with capital reserves - they just don't want you to know it yet...

Stephanie

Economists:

You pay them a large amount of money to predict what is going to happen.

You then pay them a large amount of money to advise why it did not happen.

When I see a figure of 0.1 %, it seems to me to be so close that it could go any way. Possibly the figure gives the impression of being 'massaged'.

As was part of the report, the figure will be revised later, upwards or downwards. I look forward to seeing it, if it is displayed for all to see!

(I still miss your Father's performances)

"It's a recovery - but not, if you'll forgive the jargon, a statistically significant one. "

As a statistician, I'll certainly forgive the jargon. In fact I'd be very grateful if you could go further. As you probably know, statisticians often quantify the uncertainty in figures by reporting 95% confidence intervals. Do you know what the 95% confidence interval is around this 0.1% growth? If, for example, it is something like -0.9% to 1.1%, then there is really no firm evidence that the economy is growing at all.

Quite an important point really, especially if people are going to use statistics like this to try to claim that we're out of recession.

If Brown has any sense and chance at the election then he will call the election before next GDP figures.

These are appalling (after all the hype) for the two months when people spend most in the run up to christmas.

January/February is (for me) always the months for paying off credit card bills rather than spending, and more so this year. This year starts as Frugal January and my spending is way down on normal.

Can't believe I am not like most other people, so lets wait and see what Q1 2010 brings and which side of the election these figures are?!!

After few revisions the numbers will be corrected as it happened with the US "growth". You can't print your way out of a crisis.

Maybe the BBC will run endless episodes of TelleTubbies next quarter so we're REALLY DISTRACTED from the truth.

Tinky Winky, Dipsy, La La and Po - which accurately defines the 'stages of a crash'

We had the Tinky Winky phase where a tip and a wink would get you as much credit as you liked from any bank.

We have the Dipsy stage where the Economy dipped and the bankers and politicans went Dipsy.

We're in the 'La La' phase - where people are living in cloud cuckoo land - desperate to see recovery - even the markets are starting to disagree (See the OIS rate spread)

...and finally we will be in the Po stage - and yes, you probably read it right first time.

So now we have what most people expected, an almost non-existent recovery EVEN AFTER THE hugely damaging QE and zero interest rates (lowest since 1694 when the Bank started - when by the way is was paying 8 percent!) - that must be remembered! We also have rising inflation that even the highly dubious fiddles of the NSO can't quite hide and an eye watering budget deficit that is still rising dramatically. We have also not tackled the fundamental problems in the banking system and the multi-million pound salaries of the bankers and child poverty.

The chicken entrails do not bode well at all.

How can this predictably miniscule growth report represent any material change in any sensible qualitative assessment of the UK's economic position? GDP is a only an estimate with an historic 0.2% +or- error margin? - So, on these figures, the UK economy must be static to anyone other than an imbecile.

George Osborne has got it right here - the UK needs a new 'growth' model.

Why does the UK government and other Governments use GDP growth fraud tactics like QE and concentrate vital resources on GDP stats?....

Because 'GDP growth announcement twaddle' confuses the useless rating agencies that many international investors still have regard to and so an economy that is mired in growth reductions, will eventually suffer a weakened currency and attract currency speculation.

So the UK government has got itself stuck on the GDP bandwagon and competes because global financial reporting is inadequate. This diverts vital finance away from UK mainstreet business in terms of loans and investment.

Going for GDP stat improvements instead of helping familes and business is actually holding back the UK recovery in the private sector - you know - the guys who pay the taxes!

That is why e.g. China's GDP growth forecasts must also be taken with a pinch of salt as they are fixed/fudged/fiddled just like the UK.

My view is that the Chinese economy will have serious difficulty going forward (without a new currency)and their economy will over-heat with high-inflation and this will mean currency problems in China at some point and as it is only keeps moing GDP as in a dictatorship with a central bank. This is also likely to spread inflation around the globe (SE Asia particularly), as a contagion.

GDP is a matter of be careful what you wish for and a new model of 'growth' is desperately needed to get our UK economy on its own track and off the 'GDP bandwagon'.

Don't take my word for it - read this....

https://seekingalpha.com/article/184193-the-second-phase-of-the-global-economic-crisis-is-at-our-doorstep

...helmets on optimists...

Even after all the stimuli, data massaging and positive thinking, that fact that the 'recovery' takes the form of a 0.1% (plus or minus a sensible margin of error?) increase is a reminder of just how dire a position this country finds itself as we see out the final few months of this government.

1. At 11:01am on 26 Jan 2010, stanilic wrote:

This statistic is not a recovery; it is Christmas shopping!

How many more times must I have to say this?

stanilic - did xmas not happen in 2008 then? As far as I can recall it was also on 25th Dec!
Having attended a presentation by Lloyds banking group's Chief Economist last week (yes I know the same lot that bought HBOS, what do they know about economics!) they are pretty gloomy about the prospects, mainly because of Cumulative Public debt running currently at over 90% of GDP. Whoever is elected is going to be forced to dramatically reduce public spending, which will almost certainly cause a double dip in 2011, followed by a long period of stagnation.
All in all, as someone once said that another fine mess you've gotten us into Gordy!

The anaemic growth figure may be bad news for both parties but it's perhaps over-simplistic to suggest that it strengthens Labour's argument for delaying reductions to spending. It's not spending markets are worried about - it's borrowing. The weaker growth figures suggest it's more likely that Labour's growth figures for 2011 onwards are way too optimistic. This means borrowing will rise, even if spending stood still. Would markets stomach that prospect? What about the much vaunted plan to halve the deficit in 4 years? It's likely even more stringent cuts than so far contemplated will be needed from 2011 onwards. I can't see this prospect favouring Labour at all. It's a government as a whole that lacks the stomach for a fight with itself over cuts, Mandelson and Darling notwithstanding. Even if re-elected, this battle would destroy Labour for at least a generation. Winning in 2010 would be like the Tories winning in 1992 - an election victory too far.

Stephanie

Growth of sorts - you are joking right?

As a number have pointed out this could be reduced as much as raised on furher revision and of course it is still statistically circumspect as a number have already pointed out.

If you take out the car for clunkers scheme we are still technically in recession never mind any other artificial use of taxpayers' money.

Can't see Q1 2010 being positive. Inclined to go with my previous posts and others about double dip - wouldn't be surprised at all to see election called early before the next set of figures.

Thought WOTW's comment #38 was right on the money (LOL).

Given recent argument's on this blog I've noticed a distinct lack from the La-La bunch today......

Is reality finally dawning for them?
Are BBC economics editors really going to come out of denial?

Good. Because maybe we can move forward and get a grip because I, for one, am getting a little tired of this constant charade. Just look at the evidence through a balanced set of big-picture spectacles..............

#1 This statistic is not a recovery; it is Christmas shopping!

How many more times must I have to say this?

Errr, you act as though yours should be the last word on the issue, thankfully it's not.

This blog seems to just be attended by people who's only purpose in life is to whinge, whine and moan. I'm happy to take any good news, no matter how small, given what the economy has been through. As for having yet another pop at Gordon Brown, do you seriously believe Cameron or anyone else would have done better?

A Spring View

Tu Fu (c. 750)


Though a country be sundered, hills and rivers endure;
And spring comes green again to trees and grasses
Where petals have been shed like tears
And lonely birds have sung their grief.
...After the war-fires of three months,
One message from home is worth a ton of gold.
...I stroke my white hair. It has grown too thin
To hold the hairpins any more.

trans. Witter Bynner

Yes the grass is riz !
Comparing the initial q3 estimate of -0.4% with this initial estimate of 0.1% we are seeing a change in the rate of growth of 0.5% which is very healthy indeed.
Expect this figure then to finalize at a good deal better than o.4%.

And with a bit of luck my old white hair will be holding hairpins before you know it!

Hairpins-ho!

Dear Gordon,
Just heard the joyous news that we are out of the recession
and send my congratulations to you and your team for a job
well done.It's down to your fiscal managem ..... oh hang on,
what's that noise? Oh b****r the alarm clock's going off. Ho hum,
time for another twelve hour day wondering how much longer I have a job.

Why is it that the government says three consecutive quarters of negative growth means it's a recession, but a mere one quarter of growth (which is really miniscule) is termed as a recovery? Let's see the situation in two quarters time, and we'll get a more accurate picture.

Countries bounce out of recession because factories start producing goods again.

So to bounce we have to wait for.... oh, yes, we closed all our factories, ehm, apart from the one that prints money, better print some more.

Stephanie
It might be interesting to explain how these economists come up with their predictions. They have a simple c+i+g+x-m model in there heads, I assume. Since most failed to predict the recession medium term, presumably this model works best short term. Of more interest, perhaps, is long term growth. How will long term growth be effected by the loss of finance sector productivity? Do these guys have a view on that rather than just the rather boring game of picking monthly stats outcomes. That is real economics.

It is a little worrying that the consensus of economists have got it wrong for the UK in 2009 on unemployment, recovery and house prices. This is not a dig at the economists. I think I would have agreed with them but does lead one to ask what is different this time?

46 sacallaghan wrote: ...This blog seems to just be attended by people who's only purpose in life is to whinge, whine and moan.

Over on the Times website today an ePoll has 84.5% of people responding they don't think the recession has ended where they live. You are by far in the minority to have a rosy outlook for our economy.

Stephanie is highly educated and knows that this figure does not provide the basis for stating the recession is over, hence her phrases such as "meagre outcome" and the like.

Because the figure is clearly disappointing, I think it opens up a very interesting political situation over the timing of the election. If the next quarter figures are not positive, surely this would really kill off any chances Labour have of holding any form of power.

With Alastair Darling almost certainly telling Gordon that he needs to announce in the up coming budget that VAT will be raised on 1st Jan 2011, together with other hard to swallow measures, will Gordon now call an early election while its probably as good as it gets.

I would not dare to question Liam Byrne's clairvoyant ability but it does seem to me that he may have a conflict of interest reading his CV..."co-founding the European-wide eCommerce company, eGS Group, building the business into what is now the most successful public sector e-procurement exchange in Europe"...any drop in the massive increase in government spending he has presided over I presume would help increase the the accumulated loss of Europe's most successful public sector procurement business from the £7m+ (per the latest set of accounts!)

Err brownandout (#43) - you do realise that this is a quarter-on-quarter figure and not a year-on-year figure? Compared to a year ago the economy has "grown" by -4.7%, so yes, there is a Christmas element to this +0.1% figure. On the other hand, the pre-Christmas snow will have had some effect, it could not have come at a worse time for many retailers. In comparison the January snow may have lasted for longer but at a less critical time of year, it will have knocked things a bit but mebbe not as much as some people think. However just generally some kind of double dip seems quite possible, probable even. Don't underestimate the effect of exchange rates though, exporters are going gangbusters at the moment and retailers near eurozone borders likewise. Roll on a second Brown sterling crisis. :-)

Stephanie, would you care to dwell on why the economists got it so wrong? Most were going for 0.4%, with a range of 0.2-0.9%. Is this just an indication of which way the revision will go? Or are economists just useless? :-)

Turning the corner like this is obviously welcome. On the other hand, I'm not sure why economists say that you have got out of a hole at the moment you stop digging it deeper, rather than when you get back to level ground. We won't get back to 2007 GDP until 2012 or 2013, so a man with a shovel would say that we were in recession from 2007-2012/13. Certainly we won't get back the lost jobs until that kind of timeframe, and by then we'll have the recessionary effect on Brown's tax rises on employment which should put 170k people out of work in order to keep 30k in jobs until after the election.

46. At 1:46pm on 26 Jan 2010, sacallaghan wrote:

"This blog seems to just be attended by people who's only purpose in life is to whinge, whine and moan. I'm happy to take any good news, no matter how small, given what the economy has been through. As for having yet another pop at Gordon Brown, do you seriously believe Cameron or anyone else would have done better? "


MMmmmm which is better for the Pschyce.....eternal optimism which is consequently dashed when the discovery is made that they were lying all along - or healthy pessimism so that if it doesn't come true you can be relieved with the optimists, but if it goes Pete Tong then you can at least console yourself that you were right and much better prepared than the hungry street people who will be maurauding our streets in 2012 - a bit like 'Escape from New York'

I quite agree Cameron would have fared no better and no worse - which is exactly why I remain pessimistic - for the solution is going to be hard to find when they don't even recognise the problem correctly

I mean do you put your faith in a bunch of neurologically challenged politicians who think 'GDP growth' is akin to 'A lead in the polls'?

Do not put your faith in those who brought us here - they will not lead us out of the dark by repreating the very same actions that brought us here.

46 sacallaghan

Don't you understand frustration and anger when you see it?

I am seeing my country turned into a wreck by a selfish, parasitical and destructive kleptocracy who are only in it for the money. I think the people of this country deserve better; much, much better. God knows, we pay enough for it and going to have to pay a whole load more into the bargain.

It is pointless having pops at Gordon Brown as he is so deep in the bunker his voice echoes. Now I tend to go for the sycophants who support him for no other reason than they think it is in their own interests.

Also why are you dragging Cameron into this argument? I only mentioned Christmas shopping. What Cameron, Cable or Santa Claus would have done if they were in government during the banking crash is quite irrelevant. They weren't in charge so this is a futile argument.

We all know who was in charge, we all know who changed banking regulation in 1997 so that nobody became responsible, we all know who said he had abolished boom and bust, we all know who has failed to separate retail banking from the casino and we all know who hasn't got a clue and to be truthful hadn't had a clue since day one of New Labour.

I am glad you like good news. I will let you into a secret: we all do. But whistling in the dark is not my bag. I don't run away from trouble, I go out to meet it and deal with it before it endangers others. This is what a good government would do: not sit in the bunker waiting for someone else to do it for them.

I have been looking for good news on the economy since 2003 and all any realist saw was an inflating bubble. We warned, we shouted and we were told to be silent just like now.

I am sorry the time for silence and deference have gone. There are no geniuses, there are only ordinary people who are going to need to work hard if any are going to have a future worth having.

So let us organise so we can get them the work!

We need a strategy: have you any ideas worth contributing?

47. At 1:53pm on 26 Jan 2010, onward-ho wrote:

"Yes the grass is riz !
Comparing the initial q3 estimate of -0.4% with this initial estimate of 0.1% we are seeing a change in the rate of growth of 0.5% which is very healthy indeed.
Expect this figure then to finalize at a good deal better than o.4%."

Ah onward-ho - would you care to comment on the additional 12% GDP 'printed and added' to the annual figure.....?

...or would you rather ignore it because it actually makes the GDP situation look dire and you might have to reassess your position?

So, we have figures presented that will be revised, or in other words that are not reliable. In dealing with 0.1% one way or the other, little excitment is created. Discussing the size of the last small potato since the banks took all the steak, seems an argument for the hopeless. What we do know is that the government, all parties included, facilitated the financial crisis and did nothing to prevent it, and apprently they have no answer about how to turn the economy around. Countries tied to a global economy that can't operate a national economy seems a bit of playing out of one's league.

Conservative politicians do not understand economics.

David Camerons Credit analogy is a fundemental misunderstanding of the deficit and the UKs sovereign debt position. It is unlikely (see Newsnight) that the UK credit rating will be downgraded. Two rating firms have said they have no intention of doing so of the three polled. The UK has fiscal and monetary autonomy, something that Greece does not have as they are part of the Euro (the UK can print money/raise taxes to service debt).

The new growth model for the UK economy that Gideon is on about is as defunct as the current one. Please read "Prosperity without Growth" by the sustainable development commission to see where we are really going. The growth paradigm is bust. Monetarist economics is bust at the moment. Money is cheap yet borrowing to companies only rose by £100m. When monerarist economics states that interest rates are the price of money and a determinant of the money supply and supply of finance.

Heres why it took the UK longest to come out of recession:

1. We have the largest financial services sector as a proportion of our economy. Financial services suffered the most.

The best policy is for the government to continue to stimulate the economy till the recovery is well under way. Cutting expenditure immediately = unemployment and the cost of benefits as opposed to salaries. Cut at the right point and people will have jobs to go to. Cut too early and you boost the claimant count, double dip ahoy.

"Growth, of sorts"

Hmmm. You're joking, yes?

Brown's spent/printed over a trillion quid's worth of money that we haven't earned yet in a bid to create fake temporary growth and hide the real situation to help his election chances, and even that only generates 0.1% growth?

Seeing as the 0.1% growth also takes into account the effects of spending/printing shed loads of money that we don't actually have by a government that's bankrupted the country, that means that the real growth figure would actually be nearer a negative figure of around 20% (or a -5% recession over the quarter).

We spend over a trillion quid of money we don't have and it generates a 0.1% growth? Doesn't that tell you something about what a horrific state the real economy must be in? Or doesn't the BBC want to report on that?

I guess the BBC also doesn't want to report on the actual (structural) debt. "Total government debt" always seems to be around £170billion according to the BBC, but that's not true; that figure's just a single year's overspend.

When are the BBC going to start reporting the real figures? Or is the idea of over a trillion pounds of government debt too scary for you to let the people know about?

This 0.1% "growth" figure is a sick lie told by a government that's bankrupted the country and wants to hide that fact until after may 6th. The real "growth" would actually be more like a 5% decline/drop in the last quarter.

But then again, the BBC never did live in the real world, so I don't expect them to report the actual facts in a relevant way.

I dont doubt your intelligence Steph, but you really have to do something about your bias. The worst recession since the 30's, the last out of recession and then 'only just'. Your summary...bad for both parties.

It is dreadful for the country!

I suspect your next comment will try to blame the last Tory government. Perhaps time that your boss had a word.

I must admit I find stanilic's opening comment (@1) all too likely. At the same time Disgustedofmitcham2 @ 35 raises point of major importance; what is the margin of error? The announced figure only needs to be wrong by a tiny margin for the last quarter to have been a continuation of the recession.

I detect drowning men clutching at straws.

(And I agree with the last comment in 34 as well!)

Predictions.

I realise the world has now got a '30 second memory span' - but luckily some things are recorded and cannot be 'spun'.

Lets look at some of the past predictions:

OECD in 2008 predicting GDP growth of 1.4% in 2009
https://www.telegraph.co.uk/finance/economics/4672570/OECD-warns-of-weak-outlook-for-UK-economy.html

Morgan Stanley - Nov 2008 - predicting a 0.3% decline
https://www.bloomberg.com/apps/news?pid=20601087&sid=asObi2ozzWNs&refer=home

The IMF predicted a decline of 2.8% in January last year
https://en.mercopress.com/2009/01/28/imf-forecasts-uk-economy-to-contract-2-8-this-year

...and of course don't forget the chancellor himself - and his predictions of GDP growth - which he is standing by!!
https://online.wsj.com/article/BT-CO-20100126-707941.html?mod=WSJ_World_MIDDLEHeadlinesEurope

...and the clever boys who 'predict' after the event!
https://www.ibtimes.co.uk/articles/20091207/bcc-predicts-uk-gdp-to-fall6-this-year.htm

...even the NEISR were out - and they made their prediction half way through 2009!!
https://news.bbc.co.uk/1/hi/business/8162217.stm

Do we really want to keep listening to these people - are they simply guessing and have been all along?

Hand it to Darling though - never one to give up...
"Speaking later on BBC radio, Darling said he stood by his 2009 GDP growth forecast of between 1.0% and 1.5% if the government stuck to its various policies to support the economy."

So is he expecting an upwards revision of Q4 growth from 0.1% to 5.84% - which is what I believe is needed to reach a 2009 GDP target of 1.0%?

We truly are living on the edge of madness.

55. At 2:49pm on 26 Jan 2010, Stop_it_Aggers

Read about Keynes and stimulated demand of Government spending before you show any relief that we have 'turned any corner'....

"57. At 3:01pm on 26 Jan 2010, stanilic wrote:

46 sacallaghan

Don't you understand frustration and anger when you see it? "

Why should the rest of us be interested in your emotional state, or that of the other hand-wringers and foot-stamping neurotics on here? This is a public blog, not a private psycho-therapy session.

What a whinging whiny bunch of negative ne'er do wells post comments on this site. Contrary to the beliefs of many journalists we did not return to a 30's style depression, the banking system did not collapse and none of our citizens are dying from starvation. We continue to enjoy one of the highest standards of living in the world with free health care, education and low crime, yet so many people are suckered into this negative mindset. Have you noticed that now that bird flu, swine flu, SARS and AIDS didn't wipe out half the population, and global warming looks like a load of cobblers, and the economy and the banking system is actually OK, the government have panicked that we have nothing to be scared of... so guess what.. they raise the terrorist threat from severe to critical on a whim !!
Choose to believe these prophets of gloom at your peril...me I'm off to enjoy my nice life.

Check out this 'balanced and unbiased' headline:

https://news.bbc.co.uk/1/hi/business/8479639.stm

Do the BBC get paid seperately for this - or is it all "part of the service"

Surely a headline which was along the lines of "GDP growth for Q4 at 0.1%" would have been more accurate and appropriate.

....otherwise you're going to give people the wrong idea - and don't think that will mean an early end to the recession as 'confidence' rises on the back of this misleading reporting.

All you're doing is making it worse, for the shock of discovering a lie is always more damaging than any hurtful truth up front.

Still - I suppose you would need to understand human behaviour for that and what do Economists know about human behaviour????

Perhaps GDP was ' worse than expected' so that nearer the election figures can be revised up. Then when 1Q10 figures are released Brown/Darling can claim 'steady growth', 'sound growth' etc. Who knows we may even get a claim of no more 'boom and bust'.

Unfortunately we live in a world of spin and MOPE ( management of perspective economics).

Until we as a country can live within our means any growth will be anaemic.

The problem with this statistic is that it bears no resemblance to how most folk feel.

The salaried will notice that everything they consume has got more expensive, and that their salries are not growing: they have less disposable. Ditto pensioners, students etc.

The self employed/ business owners will note that their order books are not progressing. They've already cut their drawings as best they can, and have shed cost and jobs to keep alive.

I guess in reality, the salaried have always been kidding themselves, as they could just re-mortgage to release capital for holidays etc. The truth is now at their door.

We self employed/ business folk, know how nasty lenders are when you are unable to deliver on their monthly repayments, so we're already quite lean and focused. It doesn't make it any easier however.

Recoveries seem to be more to do with optimism than reality. Perhaps we should hire Disney to represent us in Government?

46. At 1:46pm on 26 Jan 2010, sacallaghan

I am happy that you are happy with this news. It seems it doesn't take an awful lot to make you happy, which is good, given whats ahead.

You are right about Gordon as well, we must not use this as an opportunity to have a pop at him, after all, he has saved not only our economy, which must have been quite easy really, given that the UK was best placed to be first out of recession, but he has also shown the rest of the world the way forward and saved them also. Now we just have to hope that the Tories don't wreck the 'recovery' when they get elected.

67. At 3:48pm on 26 Jan 2010, Andy wrote:

"What a whinging whiny bunch of negative ne'er do wells post comments on this site. Contrary to the beliefs of many journalists we did not return to a 30's style depression, the banking system did not collapse and none of our citizens are dying from starvation. "

...and nor did they in 1929 - it was the 10 years that followed when all that happened interrupted by the stimulated demand of WWII - but what does that matter - it's only history right?

"We continue to enjoy one of the highest standards of living in the world with free health care, education and low crime, yet so many people are suckered into this negative mindset."

...and those Billions and Billions this country owes won't affect any of those things....

"Choose to believe these prophets of gloom at your peril...me I'm off to enjoy my nice life."

Ok - while you still have it - but don't come knocking my door for a turnip handout in 5 years time as I will remind you that it was just a negative mindset.

Still - I suppose you can console yourself that after so many failed predictions the 'recovery' did arrive, albeit a teaspoon amount, possibly created by stimuli....oh and of course, about 6 months after it was predicted.

...but don't dwell on details - I'm sure somebody knows what they're doing......don't they?

''The UK is the last major economy to exit recession. France and Germany both began growing again between April and June last year, while the US and Japan also emerged from recession last year.''

https://news.bbc.co.uk/1/hi/business/8480968.stm

Nuff said. Thank goodness Gordon saved the world. Now where were we talking about clunking. Arh yes Bubble popped so we are back on the curve only now holding a big bag of debt, even though so many seem to wish to deny that is the case, can't be that simple. Hmm... Funny thing is if you want to trade you have first of all have to have something to offer that somebody wants, and you also have to have somebody who has money to complete the transaction. As Grate Britain is maxed out at an individual, corporate and national handbag level I guess that might slow things down a bit. I guess that is it for a bit then.

Now that other topical event - cuts - Now if there is very little growth - which could just be the case as most seem to be maxed out on debt - just when is the time to make cuts. Arh yes I've got it. When the Grate British public want them. So the answer is to say you will make cuts at the right time, not now, sometime in the future. Yes that will do nicely, no decision is a good decision. If there is not enough growth it is because people are not doing enough, not spending enough. Yes thats it spending is the answer, somebody elses money, get somebody else to spend. Problem solved. Now where is somebody with money spare. This economic lark is dead easy, just like the political lark. Dont do anything today other than pacify and spend whatever you can get your hands on. What a lark. Damn a couple of eagles have just swooped and got both larks.

rofl

I wonder what Napoleon would say about a nation of shopkeepers without any high streets left. Arh yes I've got it - ''Among those who dislike oppression are many who like to oppress''

This increase in GDP reminds of one of Private Eye's past issue front covers featuring Tony Blair looking at his legacy through a rather large magnifying glass!

For Stephen Penneck's ONS office to come out with the figure of 0.1% GDP growth, was pure genius!

King Herod would have been impressed!!!

70. At 4:03pm on 26 Jan 2010, Crookwood wrote:

"The problem with this statistic is that it bears no resemblance to how most folk feel."

no - the problem with this statistic is that it doesn't have much relevance to anyone anymore!

https://seekingalpha.com/article/184014-sliding-back-into-the-great-recession

"Sometime in the past, GDP and Joe Sixpack’s world went their separate ways. We began to lose the linkage between jobs and GDP in 1990."

73.

Sorry to sound like a stuck record

The UK is last out of recession due to its reliance on financial services and the financial sector as its main engine of growth/tax revenues. The others mentioned have more diversified economies, manufacturing bases and agriculture.

As for cutting spending at the low point of an economic cycle, read Keynes, look at the lessons of 1929, the early 1980s and 1990s. Cut at the wrong time and make the recession worse. The tories are pushing this line about the deficit to push their own small government agenda. Its not an economic argument at all.

Successive governments have seen the UK move from being a mixed service/manufacturing economy to being almost exclusively a service economy.

Erratum to my #75

It should of course have read King Solomon would have been impressed!!!

(Herod was the one that actually killed babies...I think!)

If the revision is downwards this time (which I suspect) and following
the VAT change and other headwinds in early 2010 the recession might go on for 3 or 4 quarters yet.
The economy is very weak.

While it's right to highlight the continuing problems in the economy and this very small figure, I will say this - some people seem positively annoyed at even the suggestion the UK might be leaving a recession.

I think it swings both ways and some are guilty of going too far either way. It's no good trumpeting stats one minute then writing them off the next, is it?

I think that there should be two quarters of positive growth, before we start talking about the country coming out of recession. Will this be mentioned on the six o' clock news?. Doubt it.

66 verymuchso

Indeed this is a public blog and the public is angry. They have been betrayed: dear God, have they been betrayed!

It is my experience that people who cannot successfully play the argument will always play the man. I will look forward to seeing a worthwhile argument from you.

No doubt there are some who would be happy to send all of us neurotics to mental hospitals just like in the old Soviet Union. The only trouble with that is there was no shopping in the Soviet Union, nor Christmas for that matter!

I keep hearing about how growth should return to pre-credit crunch levels next year.
I fail to see how this is possible, bearing in mind that the growth generated in the naughties was only achieved by people getting hopelessly into debt. They spent money given to them by reckless lenders and took money out of their houses to fund a lifestyle. I think something like 35 billion pounds was taken out of property in 2006 and then spent. Where is this sort of spending money going to come from in the future.
The sooner we adapt to only spending what we earn the better, but of course that would reduce growth.
There is no doubt that we have been living beyond our means for a very long time, both as individuals and as a country.
The man in the street knows it but I sometimes wonder if our deluded politians know it.

Lol

Tory boy on the radio now still peddling the redundant monetarist mantra. "it is low interest rates that will get us out of recession."

Growth?

Ha ha ha ha ha - never in a million years - and they continue to fall one by one....

https://news.bbc.co.uk/sport1/hi/football/teams/c/crystal_palace/8481549.stm

Football is the ultimate model of a unsutainable system.

80. At 4:54pm on 26 Jan 2010, Ryushinku wrote:

"While it's right to highlight the continuing problems in the economy and this very small figure, I will say this - some people seem positively annoyed at even the suggestion the UK might be leaving a recession."

No, the annoyance comes from being told we're exiting recession when the majority of people know it's not true. This is compounded by the fact that it's the same people who got us into this mess who are now incorrectly claiming we're out of it - and only because they want us to vote for them next May and we are more likely to do so if they convince us they've 'fixed' the problem with these very dubious numbers....

All the doom-mongers commenting on UK prospects had better try explaining why the IMF is now predicting 1.3% growth for the UK for 2010. Not great by recent (1995-2007) standards but confirmation from an unbiased, objective source that recovery is underway.

Posters 1 and 2 should note that the figures are both seasonally adjusted and deflated, so neither Christmas shopping nor inflation explain the modest growth/lack of further decline. Funnily enough, the professional statisticians do think of such obvious things...

Doomsayers and other negatives would do well to remember that the figures describe the whole economy and not just their bit of it. Just like small men always deny the fact that they are well below average height, so negative people or those who have genuinely suffered economic misfortune deny that their experiences are not typical. For most people in this country this recession, like every recession, had little or no impact on their lives: they still have the same jobs, live in the same houses, and buy the same things - and so do most of their friends.

Thanks chris,

Sorry to be a 'doom-monger' but growth of 1.3% still means we are worse off as a country than we were several years ago - you know, when we had abolished boom and bust and that.

Perhaps if "writingonthewall" spent the same time and energy into improving his own economic situation as he does pontificating about his miserable lot, he might have less to whinge about !!

82. At 5:03pm on 26 Jan 2010, stanilic wrote:

"No doubt there are some who would be happy to send all of us neurotics to mental hospitals just like in the old Soviet Union. The only trouble with that is there was no shopping in the Soviet Union, nor Christmas for that matter!"

This may be true - but there was also Economic stability and strong growth in the Soviet Union....right up until they decided to adopt Capitalism.

https://en.wikipedia.org/wiki/List_of_countries_by_past_GDP_%28PPP%29

Note after 1990 the USSR / Russia drops completely off the leaderboard.

84. At 5:09pm on 26 Jan 2010, peterward2008 wrote:

"Tory boy on the radio now still peddling the redundant monetarist mantra. "it is low interest rates that will get us out of recession." "

....when you have no ideas left - all you can do is regurgitate old ones....

87. At 5:18pm on 26 Jan 2010, chrisbastille wrote:

"All the doom-mongers commenting on UK prospects had better try explaining why the IMF is now predicting 1.3% growth for the UK for 2010. Not great by recent (1995-2007) standards but confirmation from an unbiased, objective source that recovery is underway."


Would this be the same IMF who predicted a decline of 2.8% in January last year for 2009?

https://en.mercopress.com/2009/01/28/imf-forecasts-uk-economy-to-contract-2-8-this-year

You set 'em up and I'll knock 'em down....

Food for thought' I thought!


The next time you hear a politician use the word 'billion' in a casual manner, think about whether you want the 'politicians' spending YOUR tax money.

A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of it's releases:

A billion seconds ago it was 1959.

A billion minutes ago Jesus was alive.

A billion hours ago our ancestors were
Living in the Stone Age.

A billion days ago no-one walked on the earth on two feet.

A billion pounds ago was only 48 hours and 12 minutes, At the rate our government is spending it.

"82. At 5:03pm on 26 Jan 2010, stanilic wrote:

66 verymuchso

Indeed this is a public blog and the public is angry. They have been betrayed: dear God, have they been betrayed!

It is my experience that people who cannot successfully play the argument will always play the man. I will look forward to seeing a worthwhile argument from you."

I'm not 'playing the man', as you put it - quite the opposite. I'm not interested in your emotional state, and I doubt if many others are. I don't know why you claim to speak for 'the public', since your point of view is so clearly personal. If you want to be taken seriously, you could stop talking in terms of how upset you are, and present some logic and argument that can appeal to others who don't share your grudges.

#95 verymuchso,

Motes and planks come to mind. Where oh where are your REASONED arguments?

Please show me the error bars around the 0.1%.

We're not statistically out of a recession but we are???????

And as someone else wrote, don't we need two consecutive quarters to call it growth?

Out of interest, why haven't any of the opposition parties reminded our unelected leader that he said 'lending' countless billions to the banking sector (apparently to stop the country from going into anarchy) would enable the UK to be the first to come out of recession?!! Idiot.

Messrs Cameron and Clegg really missed a trick there.



Here are some simple thoughts I had about reducing public spending:

1. The more children you have, the less benefits you get for each one. Everyone here please spend a minute thinking about the madness of statements like this "My council house isn't big enough for me to give my five children a good upbringing.". Here's an idea, if you can't afford to bring up your children properly then STOP HAVING THEM! Social security should not be limitless.

2. Put road tax onto the price of petrol. People who use the roads more will pay more. This would also save tens of millions a year by removing everyone and everything involved in the pointless Road Tax government department.

3. Charge supermarkets and large stores for any non-recyclable packaging they throw out by weight. The government would earn lots of tax, pointless packaging would be reduced and it would help government meet EU landfill restrictions. Not to mention being green.

Speaking as one of the 2.5 million currently unemployed I enjoy
free health care, free dental care, pay no income tax, council
tax or NI contributions. I have useful concessions on travel,
training courses and council services. I have plenty of time
to brew my own cider and make money from personal litigation.
The government pays the mortgage on my house at Richmond Lock,
I have a health club membership, multi-channel TV and drive
a fuel injected BMW. I pay no fares to go to work and wear
whatever I feel like.

I say this not in any spirit of smugness, - I would genuinely much
rather be working were it not for the consistently atrocious quality
of Jobcentre services supposedly intended to facilitate hiring, and
the complete absence of any input from real employers when the issue
of unemployment is discussed in the media.

What's this got to do with low growth you say? Well if successive
governments (including the present one) are content to leave capable
people (I'm a graduate) to rot on the dole when they could be
contributing to the economy through effort and tax, then its hardly
surprising that the UK's economic performance is consistently lacklustre.

If I borrow £100,000 from a bank does it mean that my personal assets have grown by £100,000. I think not.

So how come when the government borrows a few billion £ that we suddenly quantify the extra money as being grown from thin-air.

Here's a new story for you Stephanie - the money we've borrow isn't free. We actually have to pay it back!