A (weak and fragile) recovery

The interesting one will this quarter. Christmas shopping is not real economy, it's fantasy.

Do you think there is an ELECTION very soon ? These latest figures sound like an overture.

Of course,you knew we`d just laugh if you had tried to spin this news in a 2009-style upbeat fashion after all the recent PIIGSUK news,hence the much more realistic tone eh Stephanie?

Whilst it is good that the headline figure (for the fourth quarter of 2009) has improved and I welcome it one also needs too look at the previous figures I feel.For example notayesmanseconomics web blog tells me that the 3rd quarter of 2009 was revised down by 0.1% so our actual net improvement in the second half of 2009 is quite small although any improvement is welcome.With the recession being considered deeper now then we are actually in the same net position as before today's figures.
I remember other economists claiming that we would come out of recession in the third quarter of last year and this revision to that period makes them even more wrong sadly. So I think your statement that these figures "will be seen as a vindication of the city analysts who thought the economy in the last months of 2009 was stronger than the official statistics implied" needs the addition that they were even more wrong on an earlier period.

Stephanie

How much guesswork goes into collating these figures? A little or a lot?

Is this optimism or just wishful thinking? You would be hard pressed to find any positive signs - jobs, investment, business liquidity, public sector job losses, no signs of export led growth, imported inflation, business trying to shake off debt rather than grow, perpetual sales etc.

Double dip if we are lucky but to be preferred to stagflation. What is the government and opposition doing - arguing over who is best at cutting the public sector and making the position worse (Birmingham giving you tory policy on approval). Instead relying on the monetary freaks in the MPC mess things up more the government should be managing the economy directly through public works, incentives for companies and direct investment. But we are all Adam Smith's now!!

Do some people really feel their is a recovery going on?Britain is on the edge of a monumental collapse brought about by the socialists sucking billions out the economy in stealth taxes which hurt the working man way deeper than the rich.In fact we have been here before after the labor party ran the economy into the ground in the seventies,12 years ago when "NEW LABOR"(same old stale massive unsupportable spending on the average mans back)came to power people really thought they had changed but it's the same old stale policies about taking away the average mans freedom and making them dependent on the government.
Hopefully people have woken up and will vote out these morons and get back to being GREAT BRITAIN again.

Well, that's encouraging news Stephanie. I had been feeling a bit miffed that of the £40bn the Treasury had pumped into the economy in 4q2009 only £1.5bn had actually gone into growing UK GDP that quarter, but now these figures have been revised, I feel a lot better. I am beaming ear to ear.


Now, I'd better leave it there to call my broker and get him to buy share with what Prudence has left me with of my savings. BUY BUY BUY!!!! - its gonna be alright. The City economists say so.

What 'recovery'?

There seems to be a real posibility that we could have a lost decade like Japan. Only Japan started from much stronger position both in terms of industrial base and consumer debt. Four day weeks etc are only a temporary measures, if the down turn is sustained then more jobs will go and sooner or later the public sector will be cut.Just as the baby boomers become pensioners and North sea oil starts running down.

"Also, the expenditure figures show all the strength coming from household spending. Both investment and net trade took away from growth - not an encouraging sign for the future. "

No change then.
No real future for new graduates.

Just another (mini) bubble to propel McBully and McRuin back into power.

Expected something like this to be honest. So we had an evern worse peak to trough loss of output than we thought, but a strange blip in quarterly GDP over the Xmas period before VAT rose is cause for celebration? I think not.

If I were a betting man, I would say Q1 2010 will dip negative again and I think Merve the Swerve will be looking at QE to restart the presses soon.

So fictional growth from stimulus spending funded by printing money and adding to an already collosal deficit at the expense of Sterling taking a hammering and inflation rearing its ugly head.

It may look good in the headlines but scratch the surface and its very scary reading.

But, where does the £200 billions of QE come into the calculation - around 14% of GDP which was to counterbalance the slump. I thought we were to see this boost nominal spending in the real economy? David Miles now announces that it has improved bank liquidity, helped big corporates and banks issue debt and pay down bank loans ( Bank Bail-out Number 6) and boost financial sector viability - but, what about SMEs? This wasnt sold to the British public as a bank bail-out!! He says commercial property prices have gone up. But, this is only for prime stock / investment grade. What about the bulk of non prime stock/values? He opens up the possiblity that Bank of England gilt purchases could attract capital losses inmdemnified by - guess who - us!

Where's the scrutiny on the policy-makers? Should we all be delegating this remedy for a National Emergency to faceless unelected economists and central bankers anymore?

Amazing how many cynics there are who refuse to believe this figure and hint at political manipulation. It's probably a good time to remind people that the Office of National Statistics is scrupulously independent. If this was not so international investors would lose all confidence - and the Tory party would attack the government immediately for "spinning the data".
We believed their figures going into the recession and we should believe them going out.

Stephanie

To quote from your report:

"The UK economy grew by 0.3% in the final three months of last year, faster than previously estimated.

The initial estimate released last month said the UK economy had grown by 0.1% in the last quarter of 2009, meaning it had emerged from recession.

However, the figure for the overall contraction in gross domestic product (GDP) during the recession was revised down, from a 6% fall to a 6.25% drop"

In other words the previous 6 quarters were actually 0.45% worse than initially thought and the economy is now 0.25% worse than we thought it was in the last quarter.

Hardly a ringing endorsement of £200bn of quantitative easing that seem to go through the banks who took a profit and paid their gamblers before being brought by the Bank of England.

I think we're still in Mad Hatters tea party economics, (guess who's the dormouse) which is where we have been for the last 10 years.

What else would you expect with Mervyn printing money. Th real pain is yet to come. Do not forget that millions of pounds of hard earned money has been creamed off the savers thereby cutting the incomes of millions of people in the country. It aint over till the large lady sings and she isn't even on the way to the theater of clowns who run the country.

"I had been feeling a bit miffed that of the £40bn the Treasury had pumped into the economy in 4q2009 only £1.5bn had actually gone into growing UK GDP that quarter, but now these figures have been revised, I feel a lot better. I am beaming ear to ear."

How do you know that without that injection, UK GDP might have dropped $200bn, so it might have returned over 5:1 on the investment? You make a rather weird assumption that without government intervention UK GDP would have coincidentally stayed exactly level.

Hold on. If the economy grew in Q4 by 0.3% rather than 0.1% but the Q3 figure was revised down by 0.2%, does this not mean that the original Q4 number was correct but that the Q3 figure was too high?

If this is the case, than this is not really helpful.

The real issue is that Gordon 'end to boom and bust' Brown has made a massive mistake during his years in No 11 Downing Street by borrowing heavily when the economy was expanding. Now he has nowhere to go (except borrowing £180bn this year from our children and grandchildren) and he has caused the biggest recession since the 1930s. This now haunts him during his (hopefully short)stint at No 10. I cannot really feel sorry for him but I do feel sorry for our children who will have to pay higher taxes, pretty much for their working lives.

I'm surprised that people are so upbeat about this "fragile" recovery. Is it really a recovery? We've thrown just about everything at it, mostly at taxpayers' expense for years to come and it's just about keeping its head above water.

The BoE has been printing money like crazy so that the government can spend it also like crazy; the VAT cut might have added something though I doubt that's as important as the pundits now claim. And the base rate is at its lowest ever. If these don't smoke-screen the truth heaven knows what will.

A recovery based on such massive stimuli is hardly worth thinking about. At worst it will provide the basis of a new bubble - after all, this is what happened in the USA post-9/11 and the house of cards fell afflicting us all.

I don't trust economists any more than I do Brown and his bumbling ways so I remain to be convinced that 1) there is a recovery at all and 2) that it won't be the seed of a new bubble that'll burst a few years down the line.

#10
"There seems to be a real posibility that we could have a lost decade like Japan."

They are in a far stronger position.
Japan is pretty close to the top of the industrial/scientific 'food chain'.

Sleeping giants rather than a declining economic pygmy.
They lead the world in robotics - the future.
R&D spend is massive.

If we have a glimmer of hope it is that future McBullys and McRuins will be well designed and programmed androids.

Economic Recovery.
Very little has been made of the fact that Politicians contributed largely to the credit crunch.
This started with Nigel Lawson’s ‘Economic Miracle’ which was funded on debt, mainly through the massive increase in credit card use through to the continued destruction of Industry & the reliance on House prices, equity release & Bankings creative ‘gambling’.
It did not take a genius to realise what was happening, the BBC had reported on irresponsible lending plus the countries reliance on debt could not continue indefinitely. The whole affair smacks of the Emperors new clothes.
What we are lacking now is contextual reporting that shows up :-
1) Politicians (of both parties) can not be congratulated for getting us out of a mess they created.
2) Analysis of the economic future that recognises :-
A) Industry has been annihilated. The cost & time to recreate the vast amount of resource that has been destroyed or shipped overseas is untenable.
B) Money generated from the release of property equity will not return.
C) Bank profits (and related tax revenues) from banks creative ‘gambling’ are gone.
IN CONCLUSION :-
A proper analysis of the economy would therefore show VERY slow growth for many years to come as the UK economy was built on sand.

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

Commentators tell us, accurately, that Germany's economy is structurally different from ours. Our service sector has always been larger, and we've had a much stronger financial services sector for 300+ years.
Surely it's the case that all manufacturing sectors include investment in inventories and anticipating sales trends, whilst service industries invest hardly anything in stocks and their outputs reflect current sales?
That being the case, one ought to expect that stock re-building in Germany's economy last year would bring their GDP up faster from Euroland's steeper decline than in our service based economy?
All of which underlines why the political mantra that the UK was in recession longer was just nonsense: our economy has been regaining sales strength in tandem with Euroland. The UK may now start the long return back to the faster than Euroland growth we've enjoyed for more than a decade. And especially now that high inward investment is no longer pushing sterling above a trade sustainable level.
What looks more likely now than not, is that the pre-Budget report's forecast of GDP growth this year was on the money. And the doom-sayers will have to find something else to moan about.

The City hates the very low base rate that we have at the moment. The forecasts of higher rates caused by the deficit may be more a matter of hope rather than expectation. There is no reason to expect a high rate of inflation in the medium term and therefore no reason for the MPC to increase the base rate.

It is very important that rates are kept low, by quantitative easing if necessary, until the recovery is really well established. Among other advantages this will help the management and reduction of private debt.

Onward_Ho will be dancing in the street!!

Hey Steph,
Do you think that Alistair Darling knows how bad it is really and that is why he is trying to put some clear water between himself and our Great Leader?

After the Election someone else might get a chance to look at the books, and I get the impression that Mr. Darling would like to shift some blame somewhere else.

Greece's problems in the markets only started because they had a change of Government.

I think you and Peston are going to be very busy in the weeks after the election.

As always the devil is in the detail. Business investment is crumbling. I am still of the opinion that the majority of the population still don't realise the dire straits we are actually in.

#21
"Industry has been annihilated. The cost & time to recreate the vast amount of resource that has been destroyed or shipped overseas is untenable."

Good analysis of where we are and how we got here.

Allowing old low-added value industries too die is not the problem.
Not planning for the future and encouraging the new technologies is the problem.

Our current crop of leaders (leaders ?) were sitting at the back of the class when their ears pricked up at the phrase 'knowledge economy' and they thought banking, insurance, consultancy.

Wrong. Knowledge economy means R&D, it means high added-value manufacturing. It comes from a fit-for-purpose education system.

The Germans still make steel but it is highly specialised and high added value and they have export markets that want it. Unlike Corus in Middlesborough.

The UK economy has taken the biggest wrong turn in economic history.

More bubbles lie ahead. Not growth.

Dear me 'Paul Atrides', what's wrong with you? 'Albeit' is a perfectly acceptable word to people who understand English, and 'albeit later' makes more sense than your suggestion of 'however later'.

I see we get the usual rubbish from people who want to put all the blame on Brown and Darling (with their usual childish insults), and ignore the fact that the problem is caused by the selfish and greedy culture has that been promoted by successive Parliaments since the 80's. I don't expect any change of Government to make any significant improvement.

It's not retail, it's not business investment, it's not increasing stock or restoring capacity.

It's government spending, plain and simple.

One last splurge of money, spunked on nothing worthwhile, purely in order to get this positive figure as we enter the final straight before an election.

Call me cynical, but to be honest that's the label I'd use for this pathetic waste of our children's future earnings.

`..the expenditure figures show all the strength coming from household spending. Both investment and net trade took away from growth..'

I think this proves the Christmas shopping effect. It is known that the retail sector needed and had planned for an upbeat Christmas to make up for the disaster of Christmas trading 2008. This certainly boosted the numbers. But the early retail sales figures I saw for January were horrendous but were improved by the addition of food and footwear sales which unsurprisingly surged. I expect the restocking from Christmas plus a late spring demand surge to boost growth figures certainly in the second quarter.

The strong manufacturing performance in the last quarter of 2009 needs more explaining given the level of prevailing and planned redundancies across the country. I don't quite get this one but I know it happened. It was too late for Christmas trading but exports on the back of the relative decline in the sterling rate of exchange might explain it a bit.

These growth figures are very small and underpinned by consumption in the public sector both as wages and as materials. Given the likelihood of painful cuts, this does not bode well. Rather than a double-dip we might be looking at a roller coaster. This is not recovery: it is just tedious and frustrating.

#22
"She doesn't know anything she has no contacts, and she writes like a six year old. "

How dare you :)

Methinks the fair Stephanie is waiting to see which way the polls go up to the election before, elegantly, vacating the fence.

Full marks to the Moderator for releasing #22 - Zero marks for the content.
Stephanie - You are right with your initial assessment. Your last paragraph is key. So when Q1's figures appear there is scope for adjustment to Q4's which would then reflect a truer picture. I'm sorry to say we're still in recession (as most followers know) and QE isn't the magic pill. Even though it will prove to be a hard one to swallow!
If the Conservatives are incapable of capitalising [sic] on this mess then a hung carcass it is.

The economy appears to be making a weak and fragile recovery, as you suggest.

Whilst nothing to rave about, it is better than the initial estimate and makes the huge fuss made by those commentators and contributors to this blog that derided the 0.1% seem rather exaggerated. As you correctly state it brings the numbers into line with French and German growth and puts us in a better position for GDP than either Italy and Spain; the latter of which remained in recession at the last release.

Another positive sign is that the labour markets in France and Germany have begun to stabilise. Although a slight increase took place last month compared to December,(respective rises in unemployment 0.1% and 0.7% points, respectively), the job losses were small in proportion to total jobs lost over the last year. These markets and their return to growth will be important for boosting current UK export demand over coming months.

The downside risks remain multiple: inflation caused by the continuing increases in fuel prices, failure to reduce utility costs to consumers by heating companies as well as the technical rise caused by the VAT rate change. The proportionately high differential between BoE base rates and market lending rates offered by banks, which must be deterring consumers and businesses from borrowing, e.g. to help with improving the housing and related construction markets. The temporary stamp duty reductions could hold back the housing market recovery this spring, by reducing the consumer demand that stabilised prices last year and makes building houses profitable again. The ending of the car scrappage scheme could affect this important part of UK manufacturing industry.

Apart from RBS and Lloyds, the other main banks seem to be returning to profits this year, so there is no reason for them to beat themselves up about repairing their balance sheets in double quick time if this hair shirt, or even straight jacket is going to undermine the overall economic recovery. Reducing interest rate differentials with BoE base rates would give consumer and business confidence a massive boost.

It sounds as if Gordon Brown and Alistair Darling need to

(i) invite leaders from the UK banks into Downing St for a discussion about reducing interest rate differentials to boost the recovery.

(ii) take steps with the USA and allies in Baghdad to ensure that crude oil supply from Iraq is increased and adequate to bring back the market rate for crude nearer to US$60 per barrel for the next 12-18 months at least. Take steps through G20 members to request that OPEC also increase supply. Speak to President Sarkozy about ensuring that the Dunkirk oil refinery is not closed as this would create further blockages and cost increases in European oil supplies.

(iii) ensure that OFGEM are creating enough downward pressure on utility prices, which do not reflect the reductions of the wholesale prices over the last year.

#22

You are a cad who deserves a sound thrashing.

I'm not an economist, just an ordinary person living in London, so a lot of the technical stuff discussed above is beyond me. But I have to say I'm confused.

Firstly, it seems that whenever there is a piece of reasonably good news about our economy in the UK, all that happens is that people rush to pour scorn on it and talk it down - "can't be true", "hiding the real facts", "a sign of doom to come", etc etc.

I come from Australia and there it seems they do the opposite. Granted they are experiencing a good economy at the moment but whenever there is a story that is potentially "bad news", they talk it up / focus on the positives from it. Why is that, I wonder??

This latest piece of news is a great example. Only last week the press was saying that we'd be lucky to report 0.1 % growth today, and my understanding is that its actually a lot better than they projected. Yet people are still rubbishing it - why?? Shouldn't we be pleased about it??

Secondly, as I say, I live in London. And though I'm not doubting for one minute that we are / were in recession, when I look around it doesn't seem it.

1 - I put my house on the market at the beginning of Feb and sold it within THREE days and for the ASKING price, which I had increased by £10k from what I was estimated by agents. I had several people put in offers for it. Hardly a recession there to me, anyway.

2 - I work for one of the biggest UK retailers, in their online unit, and we are experiencing tremendous sales growth, beating targets month on month. Certainly not sitting around waiting for sales, and we are talking about multimillion £ worth of sales each month. It doesn't feel like we are in a recession at work.


3 - We are actively trying to recruit for people. However, what we are finding is that the quality of candidates we are seeing is frankly very poor, and they are demanding ridiculous money. It seems that all the good people are staying in their jobs, and some are being paid more by their employers to stay (according to our recruitment agency, anyway) - are our unemployment numbers largely comprised of the "longterm unemployable" who would still be part of the statistic whatever state the economy is in?? (I don't mean that to be harsh to those who are unemployed, hope you understand what I mean -lack of skills, experience, poor work ethic, perhaps).

So overall, though it doesn't "feel" like we are in boom times it also doesn't feel to me like things are as bad as the media seem to delight in telling us.

And only this week, 2 new businesses opened up in my local High Street. One restaurant which opened a few weeks ago is packed each night and the pubs are definitely busier than they were during November time.

Maybe London really is loads different to the rest of the UK. Or maybe I'm just living in some parallel universe!!

"Government final consumption expenditure rose by 1.2 per cent and is now 2.0 per cent higher than the fourth quarter of 2008."

So govt consumption (note consumption not investment) and household expenditure is responsible for the growth; yet more of the debt driven consumption that got us into this mess.

"Gross fixed capital formation fell by 3.1 per cent and is now 14.2 per cent lower than the fourth quarter of 2008."

..and plumetting investment, which doesn't exactly bode well for real production drive economic growth beyond the financial services sector.

"Inventories continued to decline, down £2.8 billion on the quarter."

So we're using up some of the reserves we have, and may therefore be less able to capitalise on any global upturn.

"The trade deficit in real terms rose from £7.7 billion in the previous quarter to £8.3 billion in the fourth quarter of 2009. Exports of goods and services rose 3.7 per cent while imports rose 4.1 per cent."

... and even the Qtr 4 2009 position is unsustainable, with us living beyond our means in the global economy (never mind internally re the public sector deficit)

Then of course there's the issue of whether the RPI is an appropriate inflation measure for converting nominal GBP to a "real" figure.

A nice move in the headline figure for those seeking political capital, but beneath that, its rotten to the core and is still supported by a well inflated, debt based bublle rather than been based in long term sustainable reality.

What the latest numbers show is that we - the UK - are even further underwater than had hitherto been asserted, the alleged 'growth' reported indicates that at best the economy has slowed its contraction but probably not stopped contracting, yet. Growth may resume, but probably not till much later in 2010, possibly 2H.
The structural deficit remains and has largely not been addressed.

My cup runneth over. Hurrah!

Unemployment is much lower than expected it would be and houses prices have remained resilient. Those are the positives. Was it worth mortgaging our futures for this 'recovery' though?

The reality is that unemployment is a lagging indicator and is likely to take off once the public sector jobs start to go. The house price bubble has been reinflated by the emergency monetary stimulus measures and at some point is going to burst with spectacular effect no matter what level interest rates are at.

A lost decade? I wish that I was so optimistic.

#28 Barties

Well said - we've all been sheep led by successive governments to the hay barn of greed.

And now that barn's empty what will we do?

Probably stand there and bleet as usual!!

# 21 Frank R Cook.

I agree whole-heartedly, and have used "The Emperors new clothes" reference on occassion myself.

The debt based fake economy certainly began with Lawson, but it has been continued to extremes under Gordon Brown's "stewardhip" of the economy.

At least we had a reasonable balance of trade in 1997, now the former workshop of the world is just a consumer, morgaging its future for the latest designer trinkets today.
Massive reliance on debt, spend spend spend being the suppiosed answer to everything, perhaps we should call in the administrators now,

Good news:
A tiny amount of growth possibly based on people still buying houses at inflated prices or casino banking or Christmas shopping.

Bad news:
All the reasons the good news probably isn't.
Pound falling more in a day than the increase in GDP over three months.
Debts that we don't know how to pay.
No manufacturing.
No plan to get out of the mess.

If all that didn't make me cry, putting the picture of industrial activity at the top of the business page brought tears of sadness and nostalgia to my eyes.

#23 Leftie...

What planet are you on?

You do realsie that inward investment tends to be foreign organisations either buying guilts or acquiring our businesses on the cheap, and in many cases taking the technology while reducing UK based production.

RE: 23. leftie

Quarterly growth of 0.3% is rather less than half of what is needed for the actuals to eventually match government's projections.

" ... And the doom-sayers will have to find something else to moan about. "

Unfortunately, there is so much to choose from. A few mouse clicks on the BBC's business and economics pages yields ...

"The pound has fallen sharply against the euro despite UK growth figures being revised upwards."

"The bank (Lloyds) posted an operating loss of £6.3bn - slightly less than analysts had expected and less than the £6.7bn loss the group made in 2008."

"Royal Bank of Scotland (RBS) has announced losses for 2009 of £3.6bn ($5.5bn), after struggling with billions of pounds of bad loans."

"Average property values dropped by 1% compared with January, "

"Gross lending for home loans fell by 32% compared with December "

"The UK inflation rate rose to 3.5% in January - the fastest annual pace for 14 months - from 2.9% the month before, official figures have shown"

"Poor winter weather drove UK retail sales down by 1.8% between December and January, the sharpest drop in 18 months, official figures have shown."

Yes, it's certainly all plain sailing from here on.

#10

Too true. Also remember that the Japanese actually make things wheras since 1997, manufacturing in this country has gone from 23% of GDP to 13%. Where exactly does the PM think that these new jobs he keeps talking about are coming from? Perhaps from the windfarms where the turbines are made in Germany and Japan, installed by foreign workers and where the profits made are repatriated to BMW and Mitsibishi. Or maybe he thinks that relying on the City of London and adding to the public payroll will be the solution as it has been for the last 13 years. I think not, those days are gone.

Dear Stephanie Flanders and all people who work for Economics,

"The Economy Grew" "The Economy was in Recession".
These are two pitfalls, namely the two pitfalls of people who avoid hard work by becoming voyeurs.

Voyeurs like football fans at a football game, who sit fatly guzzling beer on a seat that cost enough to feed a family in Ghana for a month.

Even a secondary school student taught science properly knows that no number in physical measurement is to be given any credit without a consideration of the inherent percentage amount of error introduced during its measurement. 0.3% growth? What is 0.3% when the error rate is probably +/- 1.0%?

I am not suggesting that the Office of National Statistics could do better to produce the highest quality of statistics possible, but even by their process of measurement, it would be impossible for them to assess any number to an accuracy of greater than +/- 0.5%.

Then there are the inherent error rates in the assumptions of measurable quantities in Economic Systems. What are these? They are anything from +/-0.5% to +/- 5% (or even worse!).

So altogether, a guesstimate on these Economic Statistics is that they are accurate to at best within +/- 1% error. That is not without considering all the other horrendous introductions of possible errors, because human error is inevitable even with Physics, but with social sciences such as Economics, they are inevitably rife.

So what is the point of journalism covering the publication of an Economic Statistic that, given the figure of 0.1% or 0.3% GDP growth, bleats the BaaBaa refrain:

"Oh, The Economy grew, or at least it definitely was no longer in recession?"

Mushrooms grow and Trees grow, but even they have limited growth, yet non-finite human economic growth has been the fundamental assumption of trite economic thinking in the last century. Such an assumption can only be sustained if the numbers behind "growth" are changing measures. For example, when a tree starts dying, its growth numbers are replaced by the measurement of the fungi that grow on the dying tree. Such has been the measure of "Growth" in Economics, for without fundamental simple fixed variables (such as height and weight)to measure, Economics defines and continuously changes the definitions of those measurable quantities.

Growth? Spring is coming, but so is winter further ahead.

Q4 2009 GDP has not been revised up, only the growht on Q3 2009, owing to a downward revision for Q3 2009. Hence the economy is not stronger than rpeviously thought.

The ONS press release regarding GDP actually implies that Q4 2009 GDP in volume terms has not been revised upwards at all, hence also implying that the better growth on Q3 is indeed merely down to a downwards revision of Q3 2009.

The ONS press release states that GDP in Q4 2009 was 3.3% lower than in Q4 2008. Given the chained index volume number was 104.1 for Q4 2008, that implies a reading of 100.66 for Q4 2009 and the initial estimate for Q4 2009 was ....

.... 100.7!

Wooh, the stronger Q4 2009 recovery is due to a weaker Q3 2009 than previously reported! Spin indeed!

. At 11:00am on 26 Feb 2010, plamski wrote:
"The interesting one will this quarter. Christmas shopping is not real economy, it's fantasy."

"It`s as real as anything else.A dollar is a dollar is a dollar as Warren Buffet remarks.

Crash 7:

Stop ranting.The crisis began in the private sector not government.It is world wide,not confined to Britain.World trade has shrunk by a third.

A sovereign debt crisis beginning with Greece is the next stage.Governments are in debt because the private sector fouled up.And don`t blame the regulators or anyone else.Ultimately individuals and companies are responsible for their actions,they`re not children.

Individual responsibility is conservatism in action.Cool off,take a deep breath,think for a change.I take it you are not a child either?

11. At 11:47am on 26 Feb 2010, Richard Dingle wrote:
"Also, the expenditure figures show all the strength coming from household spending. Both investment and net trade took away from growth - not an encouraging sign for the future. "
No change then.
Just another (mini) bubble to propel McBully and McRuin back into power.

No bubble either but a hard grind.We are in the early stage of a world economic crisis,sovereign debt comes next.The Keynesian instruments the government has deployed has avoided catastrophe,butg only just.

This is global capitalism in one of its periodic convulsions,far deeper that the powers of Messrs Brown and Darling to be responsible for.They have made the right moves to control the bitch,it`s now a question of scale.The great depresswion was only resolved with the huge state spending of WW2.

Step back,reflect,think instead of projecting synthetic anger on virtual targets.

25. At 12:50pm on 26 Feb 2010, Elduderino01 wrote:
Onward_Ho will be dancing in the street!!

;0 )
Ho likes go-go!

chrisbastille at post 14 at 11:49am - It's not really so surprising that people are cynical. For example, we kept getting extentions on the Economic Cycle as Brown tried to convince us he had kept to his 'Golden Rule'. Nevertheless, the ONS is more independent since Brown finally gave it independence in April '08, but not quite 'scrupulously' independent. Its running costs are agreed till 2012, but before then the Treasury of the day will decide how much money they need going forward... The Director's appointment is approved by the Prime Minister.

£1 = 1.1192 Euro - 20 minutes ago.

The market is smart. The market does not speak with forked tongue.

Just think without the market telling us how bad the UK economy really is - lots of debt with no growth (in the short and medium term, and probably even the long term) - it would be even easier for our lords and masters to spin their way out of this.

12:57pm on 26 Feb 2010, Roy wrote:
"It's not retail, it's not business investment, it's not increasing stock or restoring capacity.
It's government spending, plain and simple.
One last splurge of money, spunked on nothing worthwhile, purely in order to get this positive figure as we enter the final straight before an election.
Call me cynical, but to be honest that's the label I'd use for this pathetic waste of our children's future earnings"

Cynicism is not what springs to mind,and when I read about your children`s future my heart sank.

It is "Government spending pure and simple" That`s bang on,but its motive is not the election but to avoid catastrophe.Or would you prefer a global banking collapse? loss of customer`s deposits,collapse of liquidity? We would have ended up with a siege economy based on barter,tens of millions would not have survived.

This is capitalism,it convulses so we try to control the bitch.

47. At 1:45pm on 26 Feb 2010, bryhers wrote:
. At 11:00am on 26 Feb 2010, plamski wrote:
"The interesting one will this quarter. Christmas shopping is not real economy, it's fantasy."
"It`s as real as anything else.A dollar is a dollar is a dollar as Warren Buffet remarks.
--------------------------------

OK, shall we start the bets then.
Q1 2010: - 0.5%

The Office for National Statistics seems to be spinning:

First, today's GDP figures only seem to point to stronger growth over Q4 2009 because Q3 2009 has been revised downwards. The Q4 2009 estimate itself seems to have been left unchanged.

Second, when the ONS just publishes a growth percentage but leaves the underlying data, in this case volume chain indexes, out of the press release, it is hard for the media to check what is actually going on.

Third, the ONS seems to airbrush some salient comments out of its press releases when they get revised. The January press release about employment suddenly misses 2 very relevant comments. Comments that certainly were not welcomed by the current government. The first of these comments was that the employment rate stood at a low since 1996/97, while the second was that part-time employment was at record levels since data started being collected in 1992. The second change may be justified as the number was lowered by 20,000, but I very much doubt it.

The ONS seems to be under the spell of the government.

Below you can check yourself what the differences are between the old version and the new one.

As the ONS press release read on 20 Jan:

The employment rate for September to November 2009 was
72.4 per cent. This is the lowest since winter 1996-97 and is down 0.1 on the quarter. The number of people in employment fell by 14,000 on the quarter to reach 28.92 million, the number of people in full-time employment fell by 113,000, and the number of people in part-time employment increased by 99,000 to reach a record high of 7.71 million. There were 1.03 million employees and self-employed people working part-time because they could not find a full-time job. This is the highest figure since records for this series began in 1992 and it is up 46,000 on the quarter.

As it reads now:

The employment rate for October to December 2009 was 72.4
per cent, down 0.1 on the quarter. The number of people in employment fell by 12,000 on the quarter to reach 28.91 million. The number of people in full-time employment fell by 37,000 on the quarter to reach 21.22 million, the smallest quarterly fall since the three months to July 2008. The number of people in part-time employment increased by 25,000 on the quarter to reach 7.69 million. There were 1.04 million employees and self-employed people working part-time because they could not find a full-time job. This is the highest figure since records for this series began in 1992 and it is up 37,000 on the quarter.

end

Re the employment rate, please note that it has reached a low since 1996/97 depite the increase in part-time employment and the increase in public sector employees.

Number 27. At 12:52pm on 26 Feb 2010, Richard Dingle :-
Thank you for your comments.
I partially agree with your point on high added value industry but :-
1) A lot of industry destroyed could have been modernised by re engineering plus re skilling of already knowledgeable staff
2) High added value industry were closed as the ‘decision makers’ often did not understand / allow for (as I know to my cost) ;-
a) Additional shipping / transport costs.
b) Increased stock holding costs due to extended lead times.
c) Lost business due to a less flexible supply chain, look at the shortages of ‘must have’ (horrible concept) Christmas toys etc.
d) Increased product returns due to reduced quality (caused by many reasons) plus waste etc. As a professional Engineer I am personally appalled at the reduction in product quality / durability.

35. At 1:15pm on 26 Feb 2010, sg wrote:

And only this week, 2 new businesses opened up in my local High Street. One restaurant which opened a few weeks ago is packed each night and the pubs are definitely busier than they were during November time.

-----------------

An interesting perspective but I feel certain that the Restaurants and Pubs are busy with people who have Tracker Mortgages and not the poor souls who have been sacrificed by this Government, namely the savers, to shore up the finances of the very people who helped to create this bubble.

Now my mental arithmetic isn't quite what it used to be, but I think that -0.2 + 0.2 = zero.

So although we provisionally have growth of 0.2 it was from a lower point than thought before. So we are EXACTLY where we were before!

Although I find all the pontificating over statically trivial changes of little benefit, I do hope it may encourage Gordon Brown to call a snap election.

I noticed yesterday that the European Commission now expects UK GDP growth for the year to be less than it expected in the Autumn. One of the main reasons for the downgrade is because of the increased VAT this year. Now didn't they notice last Autumn that the lower VAT rate was temporary. We all knew it was going back up, so why didn't they when they did their forecast? Do we REALLY pay these people?? Just incredible.

#35 SG
I think you can be sure that the London economy is definitely radically different to other places in the UK. Would be interested if you check with your "bricks and mortar" colleagues how much of your increased online sales are transference from shop sales... who wants to brave the high street in this winter weather when you can shop online?

#48
"The crisis began in the private sector not government.It is world wide,not confined to Britain.World trade has shrunk by a third."

This is true.
However the monetary framework has more than a little to do with Government.
Monetary policy has more than a little to do with where we are now.

The debate here concerns the state of the UK economy and the tools / options we have at our disposal to remedy matters.

QE continuing indefinitely is not an option.
Interest rates won't stay at 0.5%.

Something has to give and it will.

Good luck with 'conservatism in action'. 'Conservatives in government' might not happen (for a while).

After the banks gambled away the retirement accounts of individuals this created insecurity in the middle class. The middle class drives the economy not the banks. Had the governments taken actions that would have provided some credits or funds to those who had their personal accounts diminished by the banks things would be in better order. It is unsettling that the government sided with the banks and gave them taxpayer funds and left the taxpayer with nothing. This does not instill confidence in the people. If the banks gambled away your retirement and none of the rules concerning their gambling have changed, than why would you commit to any long term personal debt? The governments and the banks betrayed everyone and they want to pretend that they didn't. The policies that have been adopted are the reasons for lack of economic growth.....support of big business and new debt giving to the people on top of diminished personal wealth. Doesn't seem to need an economist to figure this out, but apparently their job is to misdirect any blame. There was the great transfer of wealth from the people to the banks with no public discussions and thus a betrayal of the fundementals of this form of government. The economics of smoke and mirrors continues as the bankers continue to undermine economic recovery with their greed and influence. Apprently, what is good for the banks is not what is good for the nation. Just look at the price of gold, it tells you more about the cofidence that people have in banks and governments than any report generated by economists.

One quarter does not a recovery make!

I am also quite concerned that the extraordinary measure taken to prevent a depression of any length will so warp the GDP figures that we will take heart that the worst is over when in fact all we are seeing is the consequences of the extraordinary measures.

I would be far happier that we have seen a genuine recovery if the demand for commercial loans that we see was, first, growing ,and then, growing and at a proper long term rate of interest.

#49
"This is global capitalism in one of its periodic convulsions,far deeper that the powers of Messrs Brown and Darling to be responsible for"

Obviously.

"The great depresswion was only resolved with the huge state spending of WW2."

Not my favoured solution. And not something Keynes had in mind either.

To suggest it is all some sort of act of god or nature is puerile and unhelpful.

When you think that not only has the government spent about £180Bn of our future taxes in just one year to get us to where we are, they have already committed us to borrowing another £600Bn over the next few years too (up to 2014-15). And that is the minimum that assumes excellent growth for 5 years and massive cut backs (to half the currently yearly deficit).

There are many very expensive programmes already in motion that will burn up this £600Bn in future years, that will be almost impossible to stop in a cost effective way.

To put it into context, the £600Bn future borrowing is more than the entire UK government income this year, from all source of income: Income tax, N.I., Corporation tax, fuel tax, VAT, and all the other taxes.

Considering the truly astronomical borrowing commitments that are pledged for the next few years as well as already spent, it really does make you realise what a hole we are in.

#53
"We would have ended up with a siege economy based on barter,tens of millions would not have survived."

Conjecture.
What do you base this on.

Not enough thought was put into the bail-out and whether it should have happened at all. Probably because it hit so fast.

See Steiglitz https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4424418/Let-banks-fail-says-Nobel-economist-Joseph-Stiglitz.html

35. At 1:15pm on 26 Feb 2010, sg wrote:
"I'm not an economist, just an ordinary person living in London, so a lot of the technical stuff discussed above is beyond me. But I have to say I'm confused.
Firstly, it seems that whenever there is a piece of reasonably good news about our economy in the UK, all that happens is that people rush to pour scorn on it and talk it down - "can't be true", "hiding the real facts", "a sign of doom to come", etc etc"

Well said SQ,the recession is real enough,London and the south are atypical of the rest of the country.Having said that,these blogs are occupied by professional doomsters who occupy the cretaceous swamps of out of date ideas.They probably haven`t hear of Keynes even though his "General Theory of Interest,Employment and Money was published in 1936, and advocated increased government spending to resolve the great depression.If they have heard of Keynes they will claim he is out of date,despite the current crop of Nobel Laureates in Keynesian economics.

They are not only pre-Keynesian but also want a Europe which is pre-Lisbon and Pre-Maastricht,their nationalism is cemented by the most unequal country in Western Europe,the least socially mobile and with less quality of life than elsewhere.Mobility here has just begun to improve according to the HEFC and inequality has started to reduce.We need to go further.

Finally,their small state,free market,free competition model of the economy was already in decline at the time of Marx`s death in 1883.It is now anachronistic as the state has steadily increased its power through the 20 century as a consequence of economic crisis,military spending and Health,education and welfare.As far as competition is concerned a thousand giant corporations dominate the global economy,they fix prices,regulate competition and form powerful political lobbies.

These reactionary buffoons haven`t the slightest idea about power relationships,they need to grow up,get real,begin to make informed choices..

sg 35

And here I was thinking that `crying stinking fish' is an Australian term.

An interesting set of comments. What you are seeing is called the London Effect. As a native of that metropolis I recognise what you are saying but the view is different from elsewhere. This contributes to the tensions in British society.

The Great Wen has an economy all of its own. It is big enough to stand as a country by itself. It is so huge that it not only distorts the economy in the rest of the UK it probably does the same to quite a chunk of northern Europe as well. From the inside, as you note, it has its advantages.

I am not surprised at your house sale. If you get the price right in the London market you will always sell.

I agree that retail internet sales are burgeoning as products are usually cheaper and delivered to the door of the consumer. So long as fulfilment performs you will do alright. This is having an affect on shop sales causing a bifurcation in both markets and products which will lead to some larger functional changes later down the road.

I am interested about your comments concerning candidates for vacancies. Poor quality chasing unrealistic money is not unusual in recessions. It tells you what was wrong with the economy during the boom. You wait until the boardrooms are emptied: now that gets quite entertaining!

To a certain degree you are living in a parallel universe called London. Only don't knock it, mate, as it keeps the wolf from the door. It sounds you got your head screwed on so economist or not your views are very welcome.

#53
"This is capitalism,it convulses so we try to control the bitch."

So Darling and Brown, faces contorted, loin cloth soaked in sweat, bravely try to control this great monster (the bitch as you put it) and save us all from a fate worse than...

Worse than what exactly ?

Hmmm.
Certainly a different angle.

The UK GDP figures have been and still are being deliberately fudged (like those of other countries) with expanded QE activity, to try and compete with other countries doing the same.

Presumably, the ECB approves of this kind of bent accounting practice - no wonder Greece and others are also in serious difficulty and with other bankrupt countries looking to join the EU.

Even on these bent GDP figures, it will not be possible, to identify a reliable 'recovery trend' for at least 5 or six quarters (middle of next year) so the Brown/Darling GDP fudge has got many fooled beyond the ususual crowd of Labour spin meister stooge clowns. This is very convenient running up to a general election.

I listenened to Darling on BBC1 news today (1pm) and he didn't actually say that this represented a recovery - he added a couple of words very quickly and I didn't catch them properly but something like.. 'it's looking like a recovery' and so not even Darling is claiming 'it' to be a 'recovery' - He let's the BBC do that for him!

I'll have to listen on I-player to try and find what he said but if the UK was a premier league team that had just now won its second point of the season - only a complete imbecile would then suppose that anything but relegation is on the way for that club!

#63
"what a hole we are in."

And in time honoured fashion they keep digging.

Notwithstanding the insane comments of leftie #23 (I did describe leftie's comments the other day as 'utter tripe' - this has got chips with it). Some have already provided a balanced viewpoint.

The GDP numbers are actually mixed as has been pointed out by others including Steph.

The revision up to 0.3% last quarter 2009 has been met by a downward revision of the previous quarter and for the whole of 2009 (coincidence - even I'm not that conspiracy theorist but then again.........)

The reason why sterling took a knock yesterday was a more severe underlying stat that Stephanie strangely has not reported.

BUSINESS INVESTMENT was down 5.8% in the last quarter 2009 against an expectation of 0.1% growth (as comparison 3rd quarter was -1.8%). So the analysts weren't that right.

Over the last 12 months business investment has reduced by a whopping 24%. THIS IS THE BIGGEST YEAR-ON-YEAR FALL FOR 40 YEARS. This is also a lead indicator for job/export growth. SO VERY BAD NEWS HERE.

Also as for the numpty GO knockers on yesterday's blog, the term 'supply side' includes things like business investment.

What these numpties don't realise is the current government's scorched earth economic policy means that we have no money to provide tax breaks to private sector to encourage investment (accepting also the trade credit argument).

Instead the government is pumping all available monies in to the public sector to keep employment numbers artificially high. (At a macroeconomic level this has consequences for growth forecasts as basically the private sector investment is being starved).

BTW - for those who still don't live in the real world the NHS is currently following a dictat to cut across the board in BIG double figure percentage terms as is the local government sector.

However, note this has not been made public - I wonder why?

#55 Good spot econoce.

Maybe I should just get that little bit more paranoid after all...... (but not as much as our PM)

#65
"They are not only pre-Keynesian but also want a Europe which is pre-Lisbon and Pre-Maastricht,their nationalism is cemented by the most unequal country in Western Europe,the least socially mobile and with less quality of life than elsewhere"

At last something we can agree on.

"The Government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice, according to Joseph Stiglitz, the Nobel Prize-winning economist."

What a missed opportunity - advocated by a Keynsian.

#35 sg

Fraid the London & SE picture is not a reflection of the rest of the country. Throughout the last 15 months anyone trawling job sites would have noted the disproprtionate number of jobs on offer in that area.

At my last Chamber of Commerce chinwag most of my peers were still operating at less than 75% of 2007, and many had not paid themselves for 6 months plus. In our building 'co-op' we are have increased T/O to 50% of 2007 in the last 3 months, up from 40%, and anticipate spring helping us up to 55-60%. We have not sub-contracted for 12 months, and we only paid divi, instead of some wages (everybody get minimum wage plus divi), in order to reduce personal taxation levels. But house sales turnaround is nowhere near your 3 days, and prices only boomed to avoid stamp duty; they have now stabilised again, down about 2-3%.

If you look at Retail job adverts then there is a very low level of recruitment outside L&SE, and a low level outside online retail. As the total spend in retail is not going up, then your good fortune is to to be in the right place at the right time, as old-fashioned store-based retail contracts and independent retailers disappear.

As for the long term unemployed. Well a large number are from sectors in Building & Construction, Logistics and Retail and good old mnaufacturing, in the 'provinces'. The numbers of 'unemployable' have not risen, and in some areas where migrants have left the numbers of such are down. Some have tried to take jobs in job-rich areas but find that their quality of life is destroyed by the commute/weekdays away, and apart from the financial issues, moving to a new location with many competing family commitments just is not viable. Several I know who have tried it have returned after 6 months.

As to being unskilled for the job offered, yes this is an issue, especially in technology areas where many were made unemployed from 'failed/failing' firms with out-of-date technology. Unfortunately this has left them with skill sets which are not required in for instance your online retail site. Retraining on JSE of £60pw and a max of £400 retaining grant from HMG is financially difficult when the costs of single courses in modern technologies can be £1000per course. Coupled with the attitude of 'no risk' and no 'on the job training for those with the aptitude' by recruiters it is very difficult even when retrained/newly graduated and asking only a start-up salary to get considered by employers.

I have met a few people who are still asking the earth whilst not being skilled enough, but most of those I have contact with are working/asking at a 50-60% of previous rate, and this ranges across many skills levels and areas.

Well enough chatter, there's materials to order on line right away if I'm to get them delivered on time next week

(ps our 'retail' supplier posted a year-on-year profit shortfall of 11% last week, even though their online business is up 20%)

#65 bryhers wrote:

....They probably haven`t hear of Keynes even though his "General Theory of Interest,Employment and Money was published in 1936, and advocated increased government spending to resolve the great depression.If they have heard of Keynes they will claim he is out of date,despite the current crop of Nobel Laureates in Keynesian economics.

...These reactionary buffoons haven`t the slightest idea about power relationships,they need to grow up,get real,begin to make informed choices..

Wow, some nice sweeping statements there. Did you know Keynes proposed government spending (well, all sorts of actions) as part of the economic cycle. I.e. you save up in the good times, and help out in the bad. This government has been running a deficit more akin to recessionary spending BEFORE the crisis started, and has now made interventions that will take at least 20 years to correct. Even the Treasury do not expect debt as a proportion of GDP (Gordon's Golden Rule) to be back to 40% for at least 20 years.

Now are you really telling me that Keynes was considering over 20 years as the economic cycle? That governments should practically bankrupt themselves using his ideas as justification?

Feel free to give an offensive reply.

35. At 1:15pm on 26 Feb 2010, sg.
I would comment to you as follows :-
Yes you are right London is a ‘special case’. In Birmingham unemployment is around 11%, yes that is more than 1 in 10.
Sadly it is mainly London & the South East that has exacerbated the current recession with the reliance on debt & massively inflated house prices, but also benefited from current low interest rates whilst the rest of the country has suffered, but that is the way of life.
Travel the country & you will see the evidence.
Good luck in your opulent bubble.

Just out of interest, could you also provide error estimates on the figures you publish. Obviously they're not much use without this info! Who cares if the figure is 6% or 6.2% after all if the error in the calculation is 1%?

#75
"Now are you really telling me that Keynes was considering over 20 years as the economic cycle? That governments should practically bankrupt themselves using his ideas as justification?"

Brown is more pic-n-mix than Keynsian.
Can't just pick a little bit of Keynsian when you feel like it.


"That governments should practically bankrupt themselves"

Actually us (with massive tax hikes to repair the damage) not them.

" Wow, some nice sweeping statements there. Did you know Keynes proposed government spending (well, all sorts of actions) as part of the economic cycle. I.e. you save up in the good times, and help out in the bad. This government has been running a deficit more akin to recessionary spending BEFORE the crisis started, and has now made interventions that will take at least 20 years to correct. Even the Treasury do not expect debt as a proportion of GDP (Gordon's Golden Rule) to be back to 40% for at least 20 years"

There is np year zero in Keynesian economics,it assumes you can correctly predict depressions which you can`t.There is also the complication that economic cycles do not have a uniform character.There is an undulating pattern of boom and slump,and the "Once in a lifetime tsunami," the black swa, the tipping point like 1929 and 2007-2008.

Countries entered the recession with different levels of indebtedness,we were at the European average,France,Germany,the USA were greater.All have employed Keynesian instruments of demand management. So far so good,we have avoided catastrophe.The high level of debt/deficit here is because of the salience of finance in the total economy.

Your contribution is a slightly more literate version of Mr.Osborne`s bleat. "They didn`t fix the roof when the sun was shining." As late as 2007 they were going to match Labour`s spending plans for two years on taking office.Their discovery of the deficit is the vanity of retrospective wisdom.

#75 jonearle

Nicely put JE. I preferred to ignore #65 bryhers though 'cretaceous swamps of out of date ideas' caught my eye - marvellous claptrap and very sweeping.

Reading too many text books I see. Since cretaceous derives from the latin for 'chalk' perhaps bryhers needs to spend a little more time in school doing some sums.

Run along #65......lesson's starting.

. At 3:40pm on 26 Feb 2010, Richard Dingle wrote:
"The Government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice, according to Joseph Stiglitz, the Nobel Prize-winning economist."
What a missed opportunity - advocated by a Keynsian.

I have a lot of respect for Joseph, but that sounds more Marxist than Keynesian to me.Bankrupt banks would fail depositors,reduce liquidity and stop the flow of international credit and commerce,that`s just for starters.I suspect he was being provocative in the face of the reactionary buffoons he has to deal with in the USA.Especially the market fundamentalists organizing around Ms Palin,-the hick on the high wire.

72. At 3:28pm on 26 Feb 2010, Richard Dingle wrote:
#65
"They are not only pre-Keynesian but also want a Europe which is pre-Lisbon and Pre-Maastricht,their nationalism is cemented by the most unequal country in Western Europe,the least socially mobile and with less quality of life than elsewhere"
At last something we can agree on"

But not on the causes.Although inequality has reduced since 2000 according to the HEFC with a 70% increase in university entrants among the poorest fifth since 2005,a result of the huge expansion in post 16 education by this group,and child and pensioner poverty has also reduced according to the latest OECD report (2008) The government has been too timid in moderating the effects of the market in its fiscal and social programmes.

According to the OECD report,the compression of inequality results in increased mobility and a better quality of life.Only the state has the power to do this.

RE: 55. Econoce

"First, today's GDP figures only seem to point to stronger growth over Q4 2009 because Q3 2009 has been revised downwards. The Q4 2009 estimate itself seems to have been left unchanged."

Are you sure about that?

The reason I ask is that I've just looked at the BBC's headline report here and it doesn't say anything like that. In fact it says

"The revision was due to stronger growth in services and production."

It also makes absolutely no mention of any revision downwards in earlier figures.

I'm intrigued by this because I recently looked at the more or less monthly BBC reports on public sector borrowing and they don't add up. If you look at the recent ones, the figures they quote are much lower than they ought to be based on the reports earlier in the year. It's almost as if they are deliberately adjusting the figures to make them look better than they really are - but I'm sure there's a perfectly innocent explanation.

Stephanie so many times you have reminded us as have the government, "Its a global recession that started in the United States". As if creating this pathetic mantra in any way negates the reality and scale of what is happening and what may yet come to pass. Many others, a good few of them contributors to this blog, who i suspect rarely venture outside, prefer instead sitting indoors raging at Mrs Thatcher 26 years on because she closed an unprofitable pit and beat the Marxist Scargil.


So lets look at what is coming. The US out of recession we are told. Well maybe if you add up all the funny money just printed and add it in. otherwise; nonsense they are in a depression. Look at the facts. Officially there is about 10% unemployment in the US. Which is terrible anyway. UB40 wrote a song called '1 in 10' when it was that bad here. There is also 17% underemployment (part timers wanting full time work) Another 1 million are now classed as 'discouraged' which means they are no longer looking for work. Most shocking is 35 million americans on food stamps. At the height of the Great Depression 25% of Americans were unemployed. The current true total is close to 20%.

This is simply the eye of the storm. There remains a fair chance that Soon the word depression will be the accepted term.

#79
" the tipping point like 1929 and 2007-2008"

Both were the result of bubbles.
The 1929 crash had roots in the Florida Land bubble (see Galbraith) and the 2007-2008 crash in the cheap money policy (copied by New Labour) of Greenspan that followed the DotCom collapse and then 9/11.

Politicians and central bankers were irresponsible and bankers driven by arrogance and the ridiculous notion that up was the only direction.

By roots I mean these are major causes not the whole picture. As always the whole picture is more complicated. But significant roots non the less. Other causes were the invention of instruments (both 1929 and the current) that gave incredible leverage.

Nothing really to do with 'convulsions' of 'capitalism', more 'events we dont quite understand', except with hindsight, in a 'market economy'.

67. At 3:00pm on 26 Feb 2010, Richard Dingle wrote:
#53
"This is capitalism,it convulses so we try to control the bitch."

"So Darling and Brown, faces contorted, loin cloth soaked in sweat, bravely try to control this great monster (the bitch as you put it) and save us all from a fate worse than...
Worse than what exactly ?
Hmmm.
Certainly a different angle."

The question you pose is rhetorical,the fact you find my comment surprising tells me a lot about your own thinking. The changing role of the state in capitalism is the history of the 20th and now the the 21st
century.Three factors are responsible:-economic crisis,war, and health,education,welfare.It was the engine behind the New Deal in the USA,the fascist response to the crisis in Germany,it is the post-war commitment to full employment in a free society,it is cold war and hot war,the NHS,pensioner poverty and schools.

The state is the elephant in the room of market fundamentalism.Not even the blessed Margaret could reverse that particular clock.

Bryers

Most of the doomsayers provide more insight into the current problems than your generalist claptrap.

A+ on the patronising and namedropping though

Cheers

#82
"According to the OECD report,the compression of inequality results in increased mobility and a better quality of life.Only the state has the power to do this."

I agree,
But how would the state do this and would you not agree that New Labour with a large majority and 13 years could have done more.
They did absolutely nothing.

You see my anger is not synthetic but very real.

62. At 2:42pm on 26 Feb 2010, Richard Dingle wrote:
#49
"This is global capitalism in one of its periodic convulsions,far deeper that the powers of Messrs Brown and Darling to be responsible for"
Obviously.
"The great depresswion was only resolved with the huge state spending of WW2."
Not my favoured solution. And not something Keynes had in mind either.
To suggest it is all some sort of act of god or nature is puerile and unhelpful.

Keynes may well have had a war period in mind as the laboratory for the General Theory,the first not the second.Output doubled during the war period,1919 levels of production were only exceeded in 1937, and then fell back until the start of WW2.

Indeed booms and slumps are not acts of God.Only market fundamentalists think this with their faith in automaticity and efficient markets.The latest is Mr.Osborne who wants to cut spending to release the energy of private capital! The city thinks he`s a hoot.

#86
"The state is the elephant in the room of market fundamentalism.Not even the blessed Margaret could reverse that particular clock."

Reveal yourself.
Are you Ed Balls.

Nautonier 68

What an absurd rant with the usual conspiratorial mumblings.No-one is claiming a recovery,you construct a fantasy in your mind so as to demolish it.All that can be claimed is we have avoided catastrophe,beyond that there is total uncertainty across the global economy as Mr.Darling has made clear.

How can you make informed choices in this fog of vituperation against imagined enemies.Paranoia is not a mental condition but lack of authenticity, where individuals and societies construct bogeymen so as to reconcile outward defeat with inner self importance.

#87
"Most of the doomsayers provide more insight into the current problems than your generalist claptrap"

Steady, methinks the man is on to something.
Give him a chance.

#91 bryhers

I've now realised who/what you are?

Your paragraphs are constructed by clever internet software which randomly generates sentences from algorithmic constructs and essentially meaningless.

So I wasn't wrong with my first comment of 'claptrap'.....

#92

....but I am off out with a young Laydee (not the fair Stephanie unfortunately).

54. At 2:16pm on 26 Feb 2010, plamski wrote:
47. At 1:45pm on 26 Feb 2010, bryhers wrote:
. At 11:00am on 26 Feb 2010, plamski wrote:
"The interesting one will this quarter. Christmas shopping is not real economy, it's fantasy."
"It`s as real as anything else.A dollar is a dollar is a dollar as Warren Buffet remarks.
--------------------------------
OK, shall we start the bets then.
Q1 2010: - 0.5%

Whether the economy expands,contracts or remains static in the present quarter is a total irrelevance.Any transaction involving scarce goods or resources comes within the scope of economics.Perhaps Christmas shopping expanded the growth figures,it often does,but unless people were giving the stuff away in your high street it`s not a fantasy,it`s real.

91. At 5:20pm on 26 Feb 2010, bryhers wrote:

Nautonier 68

What an absurd rant with the usual conspiratorial mumblings.No-one is claiming a recovery,you construct a fantasy in your mind so as to demolish it.All that can be claimed is we have avoided catastrophe,beyond that there is total uncertainty across the global economy as Mr.Darling has made clear.

How can you make informed choices in this fog of vituperation against imagined enemies.Paranoia is not a mental condition but lack of authenticity, where individuals and societies construct bogeymen so as to reconcile outward defeat with inner self importance.

>>>>>>>>>>>>>>>>>>>>>>>>

'The big picture is that we are still looking at a weak and fragile recovery'.

You obviously must have trouble with your reading - I'm sorry if you have a problem there.

Thanks to the BBC promulgating labour spin today at virtually every opportunity - there are millions of people out there who have picked up on the radio/TV/internet today and heard the word 'recovery' with whatever qualification may or may not have been put on it.

Otherwise, I don't need to construct a bogey-man - I can read your vitreolic clap trap rubbish!

For those who deny reality to such a degree and/or have a genuine problem with their reading I'm afraid that I can offer no advice.

Surely, its better to say - e.g. 'some modest improvement on the government's published figures but too soon to say its an indication of a 'recovery'?

https://news.bbc.co.uk/1/hi/business/8538293.stm

If you look at the graph on here - look at the chart for 2009 - see how quickly the GDP is becoming positive - too fast the graph does not make sense - that is the hundreds of billions of pounds that the Labour government is pumping into the UK economy in order to right the figures - just in time for the general election.

Nice try 'Darling' - but we're not all stupid!

74 p45builder:

An interesting post. You are correct to identify the misfit many job seekers have with opportunities, such as are available. You also identify the hopeless mismatch in funding for retraining. I can add that most training and further education is focused on school leavers and on keeping training providers employed. The cost of running a remote employment location is not recognised in the tax system and things becoming unmanageable after a matter of months is not unusual (there is a tax break in France). If a house sale is then due the inevitable question is will the job hold up in the new location, further a house sale, which may not even be available, can simply crystallise a debt problem. Almost everything HMG has done made the mobility in the system less not more. The JSA structure treats all as equals under statute, when it is clear need is not equal, and the tax paid in by individuals is also clearly not equal.

This will cause all sorts of long term problems as employers favour fresh fruit.

Here on Mongo demand remains very strong but it is noticeable that the individuals spend is planned rather than impulse driven and budgets are tight due to the influence of the debt vortex. I cannot see this disappearing quickly.

Rubgy prof

Some people remain in the cretinous period and cannot tell the differnce between chalk n cheese. You just have to chalk it up to experience and hope they do not need retraining after a tea break.

#48, #49, #53... bryhers

the thing that bothers me with your general train of thought and choices is:
"it is all normal... anybody moaning is just out of touch with reality (yours by the way)... we just swallow the pill and... all is gonna be fine..." - until next time???

I hope by 'stepping back', you do realize this train of thought would still have us around the stone age...

I understand across your comments you are in the UK public sector (or have a strong bias to defend public spending level).

First - I have a big news for you >> all countries in the world do not define capitalism as here in the UK... (in fact very few obey the same rules (or lack of)) - and by the way - very few people (you are the first I am aware of...) feel it needs to be treated as a 'dangerous bitchy species in the brink of extinction (so it needs to be 'pumped back up and left alone'...)

The big current problem of the UK - a significant increase in public spending (not a bad thing) not matched in 'conventional gvt revenue'. The difference was met for the last 10+ years with 'artificial revenue' generated by some new financial tools that were sold as the miracle of unlimited money creation from thin air (I am talking here mainly about 'modern investment banking' techniques - which are a perversion of the base of capitalism - and that 'retail banks' managed to get into through de-regulations in 1997).

Now the financial scam came to light... and the UK gvt being very heavily involved in the sector is hit very hard...

So the country is broke... and in a far more precarious situation as the one you compare it with (Germany, France,..) > as those tools are supposed to disappear (break down and re-regulation of banking), the UK is now left facing 'reality': the level of public service in this country cannot be sustained by the gvt revenue - except if we go 'back to the pre-2007 ways' (... but this would be postpone the inevitable a bit more and is not anyway in their hands)

The UK could increase massively the tax intake to meet the expenses... but I doubt it (we are talking about the same level as France/Germany/... and then a bit more to fill the quickly deepening hole)

So I am afraid the pain is coming...

And please do not get confused into a 'Private/Public' battle - this is not the point... We certainly have you and I a very similar level of life (I work in the private, I assume you are in the public) - I work hard but not make tons of money, only have a tiny pension fund and try to finish paying for my house (where I live..)
A very very few people get away with lots... (private & public) > This is where I think we should really focus to make the place better for the next ones!