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First draft of UK economic history

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Stephanie Flanders | 10:08 UK time, Friday, 23 October 2009

The preliminary estimate for a fall of 0.4% in the third quarter is clearly below expectations - and formally makes this the longest period of consecutive falls in national income since comparable records began.

ShoppersMany economists have said they expect this recovery to be slower than usual. But, if right, these data suggest it has not yet even arrived.

The very weak state of bank lending - and low state of household and business confidence in the UK and many other economies - are still taking their toll.

News of further falls in manufacturing and industrial output earlier this month had suggested that the figures might be weaker than initially hoped. But most expected the service sector to show modest growth.

However, the Office for National Statistics (ONS) estimates that output in this sector - which accounts for by far the largest share of the economy - showed another slight fall in the past three months, of 0.2%.

I suspect that the further decline in the service industries in the past quarter is a large part of the reason why so many forecasters have been caught short.

But it is worth remembering that the ONS does not have complete data for that part of the economy at this early stage - far from it. It is quite possible that the number will be revised.

Historically, official output numbers have tended to be revised upwards, over time. But this has been less true in recent times. The estimate for the first quarter of this year was eventually revised - downwards - by 0.7%.

The bottom line is that we should take this as very much a first draft of UK economic history - but clearly a disappointing one.

Update, 11:34: There's been a rapid response to today's figures from Ben Broadbent, of Goldman Sachs, who has long argued that the ONS was understating the strength of the economy.

To say he thinks the figures should be treated with a grain of salt would be an understatement:

"Do today's data tell us anything about what is really going on in the economy? Probably not. In the past, the ONS's early GDP estimates have contained no statistically useful information about growth. In the 10 years to 2007Q4 (the latest quarter for which we have fully reconciled UK GDP data), the correlation between quarterly GDP growth according to the first release and quarterly GDP growth based on the most recent data is only 0.10. In a regression of the latest quarterly growth on the first quarterly estimate, the coefficient on the early official estimate is not significant. The correlation between the UK's latest data and the Euro-zone's first release is much higher, with a correlation coefficient of 0.34. Amazingly, if one wants to know in real time what is happening in the UK economy, it has been better to follow the Euro-zone's early GDP estimates than the UK's GDP estimates.
 
"The data also run contrary to pretty much every other indicator of UK growth. The Composite PMI - which has historically been a more reliable indicator of UK growth than the ONS's preliminary estimate - is consistent with growth of +0.7%qoq." "

Broadbent notes that it's not just the PMI data - car sales, retail sales, net exports, housing starts are all growing at a pretty good clip. And it's curious, to say the least, that employment seems to be stabilising even as output (officially) continues to fall.

For the non-statisticians amongst you, the shorthand way to express those correlation numbers would be that you'd not be much worse off tossing a coin to find out where the economy was headed. I look forward to hearing the ONS response.

Update, 17:30: I promised you a response: this just in from ONS.

"ONS produces the earliest estimate of GDP of any of the major economies, around 25 days after the reference quarter - on 23 October for July-September 2009. This provides policy makers with an early estimate of the real growth in economic activity, but this is inevitably revised as the underlying data sources mature. However, we are open about how much our preliminary estimate later gets revised - over the last five years, the average absolute revision (that is, without regard to the plus or minus sign) has been only 0.03 percentage points between the first estimate and the one a month later, and 0.08 percentage points between that estimate and the third estimate a month thereafter. We are confident that today's figure is our best, central, estimate at this point in time."

I suspect the Goldman boys would say the big revisions happen after the first three estimates referred to here, perhaps a year or two after the event, when the ONS reconciles the output data with more complete information on the amount of spending in the economy, and people's incomes. But I'll let you know what they say.

Comments

  • Comment number 1.

    Round of applause for the linked GDP graph. Honest, clear and informative.

    Thank you.

  • Comment number 2.

    On this news, why is the stock market up 55 points so far this morning? It seems crazy. Is there any other explaination than "There's too much money around - hyperinflation on the way?"

  • Comment number 3.

    Well the BBC got caught with its pants down today, quoting the recession is over from late afternoon yesterday. If you looked at your own web site a number of institutions have been saying growth was unlikely.





  • Comment number 4.

    Some market analysts have been saying for months that British QE will have to reach at least £300bn before it even comes close to plugging the holes in the banks' balance sheets.

    So far QE has only reached £175bn; so it's no surprise the BoE is now considering yet further installments.......

  • Comment number 5.

    The numbers on growth are in fact worse than the figure suggest. If you take into account that 40% of the economy (Public sector) has been expanding during the last 12 months on BORROWED money, you start to get a better idea of where we are.

    The lunacy of this government continuing to spend billions of pounds that can't not be paid, will be a subject for economy students for decades to come.

    The truth needs to be told that we will not recover to the position we were at 2 years ago, taxes are going to rise significantly and spending is going to be cut by 20%, not in 2 to 3 years but now.

    The gamble GB has taken with our economy has been truly reckless and it will be the poor who will pay via high fuel costs and food as the pound sinks below the waves...

  • Comment number 6.

    Ahhhh, shame...

    http://news.bbc.co.uk/1/hi/business/8321970.stm

    ...and all hopes were pinned on a 'technical recovery' being announced today.
    It wouldn't have mattered if the 'technical goal' was scroed and we had a slight increase in growth - print 175 Billion new notes and shove them into the Economy and what do you expect?

    It's actually very concerning that we have had low interest rates for more than a year and QE - and still there is no growth

    You may accuse me of being a doom-monger, but this is actually worse than even I was expecting - I had better downgrade my expectations of a 'ten year depression' to a 15 year one.

    I do hate being right so often, especially when my predictions are so negative.

  • Comment number 7.

    These data may be "below expectations" among those who have been seeing green shoots all over the place: but, as the graph in Hugh Pym's linked article shows, they are entirely consistent with the alternative prediction that we are in for a long period of stagnation.

    It is interesting that the main fall in the services sector is in catering, hotels etc implying that consumers are cutting back on discretionary spending. In a sewrvice economy that is heavily dependent on this sector (and this spending) that should give pause for thought.

    More evidence that the real economy is no going to be "talked up" by bullish predictions, bullishly reported.

  • Comment number 8.

    So this is the worst recession ever...(in modern times). Rather vindicates those on this blog who felt that the omens were not good when the banks collapsed (due to the asset related nature of the collapse!) (Is the 1870's recession now properly seen as a more reasonable model than the 1930s?)

    PS the stock market goes up on seemingly bad news most probably because the news indicates that the extraordinary ( and stupid! ) measures of valueless money and quantitative easing will continue longer than predicted yesterday. This means that the markets are currently expecting that interest rates will remain low for longer making tiny equity returns more valuable! Note for a 'genuine' recovery both money has to be properly priced (at 5 or more percent) and QE has to be reversed! We are still digging the hole deeper and have not fixed the banks either....

  • Comment number 9.

    Why do we need constant growth - maybe GDP will go down to levels in 2003 - was life really that bad in 2003!?

    The only reason we need constant growth is that our companies, government (and many of us personally) are too indebted - and we have to pay off these debts.

    We need to get away from a society built on debt!

  • Comment number 10.

    No case for dramatic reductions in public expenditure. Better case for a programme of public works to kick the private sector into life and no more QE. Plus up basic benefits and allow future inflation to erode back to an earnings related trend norm. Increase taxes on higher earners and balance by not increasing VAT in Jan (a regressive tax).

    Time to 'let' Brown go.

  • Comment number 11.

    2. At 10:36am on 23 Oct 2009, bringiton8989 wrote:

    "On this news, why is the stock market up 55 points so far this morning? It seems crazy. Is there any other explaination than "There's too much money around - hyperinflation on the way?""

    I spent a while considering this, and the answer is because the QE money and low interest rates has expanded the money supply. With so many markets depressed and interest rates at rock bottom the only place to put your money is the stock market, in hope that we're at the bottom and the only way is up.

    Once the QE money stops being pumped and the rates change the stock market will collapse again - possibly more dramatically than previously.

    What people don't realise is the number of records being broken. Just yesterday I saw a piece written by an analyst showing the US bank loans market (all lending) since 1974.
    Not once, even during recession has the level dropped. The worst it has been was flat during some of the harsher times - that is until recently when the net loans made dropped in the US - and by some margin.

    To say this is like any other recession is very, very dangerous.

    http://seekingalpha.com/article/167159-the-muddle-through-economy-r-i-p

  • Comment number 12.

    Post 2 one day moves in the stock market aren't critical. The stock market is down quite a bit this week possibly because some people bet on the GDP figure being worse than it has been and thus were looking to make money on the downside.
    If GDP is actually better than they expect it then the shares prices will rise.
    If you see the following one month chart for the FTSE 100 you will see that shares rose, possibly people expecting things to be better than they have turned out to be and in line with government spin, earlier this month.
    http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/stockmarket/3/one_month.stm
    I wonder whether the fall earlier this week was partly due to leaks or inside knowledge that we wouldn't be coming out of recession?
    Often when news is seen as bad there is a spike in the share price as the shares may been over sold downwards and things aren't as bad as some people expected. Equally there may well have been an amount of profit taking considering how much the share index has risen since March this year.
    On a side issue it would appear that Baroness Vadera's green shoots may have been killed off by the first frost of autumn.

  • Comment number 13.

    No surprise for businesses people, here at the service sector coal face we know exactly how tough it is.
    Economists need do no more than ask the coastguards to keep count of the unemployed bulk container ships and tankers using sheltered deep anchorage round our shores.
    I counted 11 in Torbay last Sunday, when they set sail that will indicate that a recovery might be under way.

  • Comment number 14.

    Manufacturing and production are down....Is that because the factories were shut to send to plant abroad to save costs? Is that why the figures are down?
    And the city does not really produce any thing to make an impact on these figures does is now?

    Soon the service industry will fail to up the figures as there will be nothing to service.

  • Comment number 15.

    Another setback for the "Green Shoots Brigade". It will take more than a few City spivs manipulating the FT index artificially (and temporarily) upwards to justify their annual bonuses to get us out of this recession. How does anyone seriously anticipate consistent growth while the banks continue to strangle the real economy by refusing to lend or even when they do, applying rip-off terms and conditions. In fact, at the moment banks are still WITHDRAWING lending to businesses and individuals. And does the Green Shoots Brigade really think that after 6,7 or 8 quarterly falls, when we eventually DO have one quarter of 0.1% growth, that everyone's going to believe we're out of the woods ? Clearly, no politician, economic "expert" or anyone else has a clue. Caledonian Comment

  • Comment number 16.

    #5 - I agree absolutely.

    There should be some sort of debt adjusted GDP figure looking at all types of debt (both public and private) and stripping this out of the growth figures.

    I'm sure that that would have shown that most of the previous 'growth' of the past years was just down to extra consumer borrowing as people borrowed more against inflated house prices etc.

    Debt has to be paid back - the government, companies and individuals borrowing more and then spending it doesn't mean the economy is more productive.

  • Comment number 17.

    Isn't it lucky that Britain " is best placed of all the industrialised nations to ride out the recession" because it looks like it's going to last until this disgracefully incompetent government is consigned to history's dustbin.

  • Comment number 18.

    Nice to see Darling is sticking to his view this morning that we will get growth by the end of the year...

    I wonder if he will be so brave on the £175 billion deficit for this year. Month after month we have had treasury spokesman saying that the £175 billion was the worst case scenario and we are still on track. We all know it's going to be insufficient and next year is going to be far worse.

    "The best chancellor we have ever had" .GB

    Says it all...Delusional..


  • Comment number 19.

    Why is the emphasis on the figures being a first draft rather than on the fact that they are much worse than many anticipated? Would there be the same emphasis on the provisional nature of the figures if they showed growth?

  • Comment number 20.

    #2 @ 1036 wrote:
    "On this news, why is the stock market up 55 points so far this morning? It seems crazy. Is there any other explanation than "There's too much money around - hyperinflation on the way?""
    The FTSE 100 is comprised almost entirely of very large, multi-national companies - oil, mining, financials, pharmaceuticals - that earn most of their income outside the UK. Thus the movements of the index are not really related to the market's view of the prospects for the UK economy.

  • Comment number 21.

    With energy prices on the way back up again, tax rises and public sector cuts ahead, seems that more QE is inevitable. On the lighter side, I heard of an amusing description of the economic outlokk which did not invole letter shapes (v, w etc) for a change. A female banker decsribed the oulook as having the same shape as a pair of breasts. We are apparently on our back up to the top of the cleavage but with another dip to go! Unfortunately, no indication of size was given so I am no wiser of the likely depth of the upcomning second dip!

  • Comment number 22.

    Looking at the stats on the ONS website, the biggest fall in ouput is in "mining and quarrying", down 3.5%, followed by hotels, restaurants and construction, down 1%. Manufacturing, on the other hand is virtually unchanged over the quarter, as is services. This probably explains why most commentators missed the fall. The picture is very uneven and it seems only a few sectors of the economy have contributed to the headline story.

    It would be nice to have an explanation as to why "mining and quarrying" is down so much. Is this an erratic number that could be reversed next quarter? Does this include north sea oil output? Are we just looking at a blip in oil production?

  • Comment number 23.

    #10 - good point.

    Why not put top rate of up to 44% or something rather than cutting expenditure - sadly it looks likely the tories will just cut expenditure rather than raising taxes - a recipie for disaster in my opinion - mass unemployment and a 1930's style depression. (the politicians need to read Paul Krugmans book - Depression Economics - they don't seem to have a clue)

    Lets just pray it doesn't lead to the reemergence of the far right as was the case in the 1930s.

  • Comment number 24.

    #2 "On this news, why is the stock market up 55 points so far this morning? It seems crazy. Is there any other explaination than "There's too much money around - hyperinflation on the way?""

    Good question. Surely the problem is that too much of the money that has been pumped into the economy has ended up in the wrong hands. Instead of it ending up in the hands of the man in the street, who could use it to pay off debt or to consume more (and thus boost the economy), it's ended up in the hands of the City who are, as ever, using it to pump up yet another asset price bubble.

    We have to realise that it's not how much money there is in the system that matters, it's who owns it. We should stop giving the QE money to banks and vainly hoping they will increase lending, and instead just hand it out to ordinary citizens. And better still, make major changes to the tax system to redistibute money from rich to poor - that's the only viable way out of this mess of recession and over-endebtedness.

  • Comment number 25.

    You are correct to say that our reconciled GDP figure is better correlated to Euro zone GDP figures than to the "first guess" GDP number.

    It is also better correlated to steel consumption (in tonnes, not £ Sterling) and to copper and oil demand.

  • Comment number 26.

    How about publishing a version of GDP that ignores the make-believe profits of the finance sector? Maybe then we could see what the actual state of the economy is.

  • Comment number 27.

    Sitting in a corner office at Goldmans and contemplating your (QE backed) 7 figure bonus I am sure it is easy to doubt that the economy is really contracting - walking through a Northern town past all the empty retail units may give a more realistic picture of the UK economy for the majority.

  • Comment number 28.

    "The preliminary estimate for a fall of 0.4% in the third quarter is clearly below expectations - and formally makes this the longest period of consecutive falls in national income since comparable records began."

    Just before the 'downturn' BOS declared that we had had 65 consecutive quarters of growth averaging 2.5% a year.

    Only 59 more to go then? (and then some?)

    How about doing some reporting on what the miracle exports re going to be apart from nefarious rhetoric, 'liberal-democracy' an 'Financial Services'?

    Surely some of your bright contacts are brimming with ideas Stephanie?

    I'm eagerly looking forward to that series, honestly, the rest you can file away as far as I am concerned.

  • Comment number 29.

    I love Ben Broadbent's assessment that the quaterly GDP growth figures are no more useful than flipping a coin when it comes to making actual predictions. I actually did use the random number generator on my calculator when I decided where to invest, and it told me to put my £500 in Cadburys. That was about 13 months ago and didn't turn out too badly.

    At around the same time one of my friends laughed at me for this, and invested in HBOS just before it was taken over, because he was admamant that his economic nous (and economic's degree) would give him an advantage over simple luck. There's definitely something funny about this (thankfully my friend had the money to lose).

  • Comment number 30.

    This is a really bad number. QE is a disaster in the long run but it should have helped in the short run by boosting the money supply. That is what has been driving the stock market and top end property. It is frightening that none of that £175bn ( a truly huge sum of money equivalent to more than 12% of GDP) has apparently bled through to actual activity as opposed to market speculation.
    The analogy with Japan gets ever closer: free money hot off the press is not having the desired effect. I am sure I saw that Government spending had increased by over 5% in the last year. This makes the private sector figures truly scary. Anyone who thinks that unemployment has peaked is in for a series of nasty shocks.

  • Comment number 31.

    So GDP has now fallen in total 5.9% yet Clown beleives that next year we will start a period of yeasr with 3% + growth so he can still spend spend spend.

    Will he go to the election with a CAST IRON garantee of what TAX rises, VAT rates, and spending cuts he will impose to get us out of HIS mess? or will he wait till the day after the lecection and call an emergancy budget as the tories have promised?





  • Comment number 32.

    Ah yes, Goldman Sachs..

    Are they not the banking giving away billions in bonuses?? Obviously not acting/spinning for their own self interests...

  • Comment number 33.

    What a surprise the economy is not recovering. Who would ever have thought it? What with all that funny money around, all that statistical manipulation, all those accounting changes, all the spin and the media cheering themselves hoarse - and yet still no recovery.

    What shall we do? I know lets get Goldman Sachs to come out and start smeering the ONS. No doubt some of the less helpful employees of the ONS can be given early retirement. That will make it all better.

  • Comment number 34.

    May I join the glee club, the delighted contributors who were against government borrowing from the beginning of the crisis? Several more millions unemployed might have made the working class think twice about wage demands and conditions of employment. As I write our cleaner sits taking a coffee break and the gardener only did three hours before packing up because of the so called rain, and I could see through the sitting room window it wasn't all that heavy. The conservative alternative is the medicine this country needs to put the clock back to where people like myself feel back in charge of events.

  • Comment number 35.

    Two comments about the ONS growth figures.

    1. They should give a statistical confidence range of plus/minus with the GDP figure. Presumably the confidence rahge would be bigger with the early release than with later releases once the full details have been received.

    2. The ONS adjusts the GDP for inflation. I wonder if the adjustment can cope with the negative inflation seen in some areas and the fluctuating exchange rate.

    Another issue is the attempted politicisation of the ONS statistics on growth and other figures. The media (and some economists) may have too easily accepted government spin about the end of the recession.

    I would not take too much notice of the Goldman Sachs economist trying to justify that his forecast of GDP was wrong because it's all the fault of the ONS.

    Over many years there has been a trend to milk businesses through the higher taxation, forcing many abroad, and by causing businesses to under take administration on behalf of government but at businesses expense. This plus the increasing burden of regulation and an anti-business culture will take very many years to correct but corrective action has not even begun yet. This makes us less competitive than other countries (like Ireland) who have become more business friendly.

    As a result expect future UK growth to lag most countries in Europe, Asia, South America and North America.

  • Comment number 36.

    Let me understand this correctly - the EU growth figures are a better predictor of UK growth than figures produced by the ONS in the UK ! I suggest the public expenditure cuts start with the ONS.

    You really could not make this up

  • Comment number 37.

    How many more false dawns like these will occur before the UK economy actually does grow again?

    Those of us who predicted an "L" shape recession are, sadly, being vindicated.

  • Comment number 38.

    For those interested in the real world the Woolworths shop in the Pallisades Shopping Centre in Birmingham (where you come out of and go into New Street Station) is still empty and unlet ten months after it shut.

    Its a prime spot just by the entrance next to HMV and just past McDonalds and has thousands walk past it every day yet still no one wants it!

    As post 27 points out any trip to a major retail centre outside of the "City" will show you lots of shut units and plenty of closing down sales. In the Bull Ring in Birmingham and the Trafford Centre they paper over some of the units fronts with adverts to try to hide some of them to give an illusion that things aren't that bad.

    I wonder when one of the big Pubco's will have to follow many of the smaller chains and have a pre-packed administration to shut loads of under performing bars and lay off a load of staff?

    Perhaps a really useful Economics measure to check how people feel is to simply ask people how much they intend to spend on Christmas this year?

    For those interested occupancy rates in hotels in Majorca during July and August this year were down 9% on 2008 and in Ibiza down 6.5% on 2008. I wonder how much lower they will go next year when things still don't seem any better?

  • Comment number 39.

    I think that many of the people in the various companies filling in the forms for the ONS were deemed to be non-productive and made redundant. This then impacts the samples taken by the ONS to produce their apparently very accurate guess of minus 0.4% for the whole country. It's really a joke at out expense so just laugh...

  • Comment number 40.

    12. At 11:13am on 23 Oct 2009, Ian_the_chopper wrote:

    "On a side issue it would appear that Baroness Vadera's green shoots may have been killed off by the first frost of autumn. "

    Ah yes - my favourite subject...

    Can anyone at the BBC ask why we are paying for this woman to advise us on Economic matters when she clearly has absolutely no idea what she is talking about?

    When people talk about public sector waste they often concentrate on the 'liitle guy' - whereas this 'Baroness' represents all that is wrong in the public sector.

    Self appointed 'know nothings' who pay themselves vast amounts for their inadequacies (although coming from the financial world I guess this is 'the norm')

    It's a total disgrace that she has gone on from her 'failure' of being a parlimentary secretary to now speak her nonesense at the G20.

    Have a read of her profile - and tell me if you see anything worthy of her current position.
    http://en.wikipedia.org/wiki/Shriti_Vadera,_Baroness_Vadera

    It seems to get a job with the 'Socialist' labour party you need to show your 'Conservative' colours by selling off the nations assets.

    What a contradictory sentence that was - and yet that is the situation we're in. Red is Blue, Blue is bad and therefore Red is bad.

    So who should we vote for in the next election?

    I shall set fire to my voting slip because that's all it's good for.

    I am sick of this country being run by the selfish - for the selfish, whilst telling us how we must stop being so selfish as it's causing problems.

    How much longer before I can roll up to Parliment with my pitchfork? I am getting very impatient.

  • Comment number 41.

    Ben Broadbent has confidence in the SIGN (NEGATIVE) on the contraction, then.


    Give that man a bonus.

    The price of houses in Central London and the FTSE have a - 1 correlation with reality, Ben.


    But the bubble the bonus-boys**** live in will burst, with a vengance!

    **** They get the bonus for bidding up their own stocks and shares and credit worthiness by bidding up the price of their own houses.

  • Comment number 42.

    18. At 11:29am on 23 Oct 2009, hughesz wrote:

    "Nice to see Darling is sticking to his view this morning that we will get growth by the end of the year..."

    That sentence (rather embarrassingly) just made me cry out in despair at work.
    Please do not depress me any further with statements from idiots who are supposedly 'managing us ouf of this mess' (after managing to get us into it).

    I sit on teh 9th floor - and guess what just flew past the window (oink, oink)

  • Comment number 43.

    34*

    Great post -made me laugh..

  • Comment number 44.

    I have been posting on the BBC for a while now and I have noticed a trend of agreement from the other posters - which wasn't there in the beginning.

    Currently there is very little debate on the following issues:

    1) We're in deep trouble Economically
    2) The Government (and the opposition) don't have any answers
    3) The city continues with business as usual - oblivious to the chaos created
    4) Bubbles are great in the short term - but bad in the long run

    We all still argue about the causes of recession and the best way out of it - but one thing I conclude is we cannot rely on our politicians to rectify this mess.

    They were never in control when the going was good and they're certainly not in control now the system is collapsing.

    I still cannot understand why the experts describe the problems as 'systemic' and yet nobody is prepared to question the system publicly.

  • Comment number 45.

    The Tories criticised the Government for it's £175bn budget deficit...to which the Government replied "Hey!, look over there, it's Nick Griffin"

  • Comment number 46.

    The disconnect with Europe is huge now. They PRODUCE stuff, unlike us who print bits of paper to get stuff and get mugs to hold on to them, thinking them of some value, which they're not.

    France and Germany nad Italy may be led by EuroTories but they're behaving like Butskellite socialists.

    Here, our Red party is behaving like Thatcher and our Blue party is heading us for Dickensian England. Next year and thereafter will make the 30s look like the Good Times.

  • Comment number 47.

    Typical of Labour getting its priorities wrong and dumping loads of our money into a hole.

    The only way they could have turned around this recession would have been to invest in small and medium businesses, encouraged investment by reducing corporation tax, bringing back the £10k minimum turnover before tax and cutting spending as soon as there was a problem.

    And these failures still don't give up and call an election.

  • Comment number 48.

    This is not just any ressesion its a Gordan Brown ressesion

  • Comment number 49.

    Next quater is going to be even worse, new orders died in September, our Sep / Oct new orders are 10% (90% down) on last years figures, up untill september we were only 6% down year on year.

    Speaking to other small business in our town they with out execption noticed orders massivily drying up in Spetember.

    Roll on next quaters figures.

  • Comment number 50.


    Re 42

    Don't blame Darling for getting us into this mess, blame Brown and Balls.

    Given the exceptional circumstances, Darling has done a reasonable job.


  • Comment number 51.

    34 - ah the old misguided beliefs still live on....

    So the 'wealth creators' are so arrogant now they feel if they are put back in charge they can rectify the situation.

    Do tell me Mr creator - how do you create wealth with no workforce willing to be exploited?
    Going to deliver your own post are you?
    Generating your own electric will you?

    Maybe you need to smash the trade unions, repeal all workers rights and dig around in the loft for those shackles you put away 200 years ago.

    I'm sure you feel that everyone around (or rather beneath) you are lazy, but I'm sure you're cleaner isn't pocketing a £5m bonus this year for simply moving money around - hence her reluctance to give her job her all.

    Maybe if you weren't so lazy you wouldn't need to employ a cleaner and a gardener in the first place - and that would stop you complaining about your value for money.

  • Comment number 52.

    48. At 1:01pm on 23 Oct 2009, icewombat wrote:

    "This is not just any ressesion its a Gordan Brown ressesion"

    Ah yes, but actually it's not is it - or was the previous one a 'Major recession' and the one before that a 'Callaghan recession' etc...

    Haven't you spottted the pattern yet - one thing is consistent throughout - the names have changed but the recession is still born from the Capitalist system.

    Am I not saying it loud enough?

    This is like when people used to say thunder was a sign of God venting his anger - not realising that everytime they heard it, it would be followed by rain - i.e. a storm.

    You can get rid of Gordon tomorrow - it won't make a jot of difference. Until a party is elected with a mandate to remove the Capitalist system then I'm afraid you will be experiencing this more than once in your lifetime.

  • Comment number 53.

    We should just rename the square mile 'gamblers anonymous'

    http://news.bbc.co.uk/1/hi/uk/8321592.stm

  • Comment number 54.

    Just a few points:

    Firstly, what do all those City "experts" do all day? They've spent three months guessing whether GDP will go up/down/nowhere, and got it hopelessly wrong. They are often "surprised" by what happens to interest rates, as well. Hmm. Perhaps they aren't experts after all, then. You could toss a coin with roughly the same degree of accuracy, it would seem.

    Secondly, where are all those other "experts" who predicted this would be a white-collar recession, affecting London, professional groups, and women most severely? As Hugh Pym has diligently pointed out, all those assertions turned out to be complete cobblers as well. As usual, London and the chattering classes are doing best in the downturn. Manufacturing, most places north of Watford, and manual male labour, are doing the worst. Plus ca change...

    Why would we now take the views of these "experts" seriously about when/how the recovery will take place?

  • Comment number 55.

    Congratulations to Ben Broadbent of Goldman Sachs, he has proved yet again that "there are lies, dam lies, and statistics". Clearly he is the master of the spreadsheet with a few add-ons to calculate correlation coefficients: I expect Goldsman pay him a couple of mill a year for his trouble, and that before the Christmas jiggle of Santa's sledge carrying the bonus.

    Yes the figures are the "flash" reading, and yes there will be revised, possibly up (but also possibly down as Stephanie pointed out).

    Of course we can't let a little thing like the facts get in the way. Goldmans is making a mint by momentum investment trading, with the cost of money close to zero and staying there for another year or so. If Goldmans gets its timing wrong and is left holding the parcel, in this game of pass the parcel, when the cost of money starts to rise, it will, of course, demand that the taxpayer bails it out, just like it did this time last year.

  • Comment number 56.

    Update, 11:34: There's been a rapid response to today's figures from Ben Broadbent, of Goldman Sachs, who has long argued that the ONS was understating the strength of the economy.

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

    Bearing in mind that the latest GDP growth figures would be much worse if not under-pinned by massive quantitative easing - Which planet does Mr Broadbent think that he is on?

    The GDP figures have been 'fiddle-diddled' by 'danger mouse' Darling in order to get statistically close to 'zero growth' and which is a most closely guarded government 'secret'.

    The issue is when the QE money runs out and the UK economic GDP is still declining next year - What will have to be done in order to prevent the collapse of the UK economy and UK government finances.

    The only real course of action (unless the global economy picks up substantially) is for massive tax rises and which will slow the UK economy to a near standstill, for several years to come.

    This is because the UK economy is not itself a global economic driver and the UK has to wait for the global economy to recover first.

    We have to cut through the spin and hype to see what is really going on here - the real UK economy probably contracted somewhere in the 3.0 - 4.0% range, in the 3rd quarter this year, if the QE monies are stripped out, but as the QE expenditure is a mystery to nearly all outside of government - and the rest are gagged by 'danger- mouse' so that he can keep telling lies until the general election is sorted - Who can be sure of the figures?

  • Comment number 57.

    Do you mean that the economist have gotten it wrong....again. As they missed the greatest swindle in history I wouldn't be too upset over a couple of fractions. Goldman Sachs, paying out bonuses, thinks it is simply a way the numbers are configured.....funny...they participated in the configuring of numbers that brought down the economy. Sounds like Humpty-Dumpty to me.

  • Comment number 58.

    "52. At 1:18pm on 23 Oct 2009, writingsonthewall wrote:
    48. At 1:01pm on 23 Oct 2009, icewombat wrote:

    "This is not just any ressesion its a Gordan Brown ressesion"

    Ah yes, but actually it's not is it - or was the previous one a 'Major recession' and the one before that a 'Callaghan recession' etc...

    Haven't you spottted the pattern yet - one thing is consistent throughout - the names have changed but the recession is still born from the Capitalist system."

    Did you visit russia in the 70's and 80's? I did and even though we had the 3 day week at the time of my first visit the russians had noting! The shops were empty and queues were everywhere. Yet from memory they didnt have the capitalist system?

    But I will confirm back then they did have a lot of phantom tractors being produced much like Clowns helicopters today!

  • Comment number 59.

    No government, either Labour or Conservative has ever run the country as a business should be run.

    Minimise the cost base, maximise the profit and invest in long term assets - like social housing, infrastructure (power) and productive efficiency.

    Under Conservatives out sourcing of jobs was the vogue.
    Under Labour bureaucracy is the vogue.

    Business planning for UK PLC was left in the hands of the private sector.

    Why should the private sector invest when no other private sector firm invests in our infrastructure ?

    What annoys me more than anything is we have seen spending off the charts yet no physical investments to UK PLC's name.

    With £7 billion in extra outgoings to the EU next year because of removal of the agricultural levy negotiated by Margret Thatcher we have more and more expense. Given a choice of implementing a low cost red tape we choose high cost red tape.

    I note the French have negotiated a scheme to increase their subsidyes on Beans - using UK PLC money no doubt. Decreasing UK PLC competitiveness again. I note the cattle industry is going to be destroyed as government policy reduces support for the growing of meat.

    Record immigration continues to swell the masses of the poor and make the low paids lot of finding a job even worse.

    This country is doomed to obscurity.

  • Comment number 60.

    Not to worry. The preliminary estimate for the next 5 years from the Office of FrankSz is wholesale misery all round. The UK is nothing special in this regard.

  • Comment number 61.

    Writingsonthewall -

    "I still cannot understand why the experts describe the problems as 'systemic' and yet nobody is prepared to question the system publicly."

    Well said.

  • Comment number 62.

    Re: 54

    God knows what the city experts do all day, but it is becoming increasingly clear that they were only ever experts in their own little financial game. Now that the rules have changed, they are no more clued up than anyone else.

    The problem is that the investors and advisers at places like Goldman and Sachs relied on no one actually understanding what was going on behind the jargon, and they relied on their belief in unilateral economic growth. When the entire economy is growing, it's easy to make good investments. Now that people realise that their expertise was only ever an illusion of productivity, how can their positions be justified?

    Nothing significant will be done about this before the next election, but I still hope that a new Tory government might have just enough public goodwill, and just enough moral fibre, to push through the kind of reforms that are being suggested by the likes of Mervyn King.

  • Comment number 63.

    Chancellor Alistair Darling said he had never expected to see growth before the end of 2009. Yet in his Nov 2008 pre-budget report he said the following:

    "I, too, am forecasting that output will continue to fall in the UK, for the first two quarters of next year.

    But then, because of decisions taken in this Pre-Budget Report, I expect it to start to recover.

    GDP growth for 2009 is forecast to be between –¾ per cent and –1 ¼ per cent."

    Incompetent and a liar too.

  • Comment number 64.

    How much is your UK taxpayer sponsored bonus this time Mr Broadbent?

    Have you ever heard of quantitative easing Mr Broadbent and if so - How have you measured this and adjusted the 'earnings' of UK/other eurozone countries to compensate for this in some kind of comparison between eurozone countries?

    I think that you are talking nonsense Mr Broadbent!

  • Comment number 65.

    Stephanie, not sure what they are teaching at Oxford these days but I don't think that correlation coefficient of 0.1 or the correlation coefficient of 0.34 are sic "the shorthand way to express those correlation numbers would be that you'd not be much worse off tossing a coin to find out where the economy was headed" Tossing a coin has only two outcomes each with a probability of 0.5 Whereas, what Ben Broadbent was clearly saying was that the first release of ONS GDP data compared to its subsequent revision (once more data was available) had historically no statistcal significance ie you can not interpret what the final GDP growth figures will be from reading the ONS's first release - it has nothing to do with the probability of tossing a coin - rant over

  • Comment number 66.

    "59. At 1:48pm on 23 Oct 2009, JackMaxDaniels wrote:

    With £7 billion in extra outgoings to the EU next year because of removal of the agricultural levy negotiated by Margret Thatcher we have more and more expense. Given a choice of implementing a low cost red tape we choose high cost red tape."

    You must remember the 4Billion this year and the 7Billion next and all follwoing years was down payment for Blair to be EU president.

  • Comment number 67.

    45, Superb post, LOL!!!

  • Comment number 68.

    40 Writingsonthewall
    "Red is Blue, Blue is bad and therefore Red is bad.
    So who should we vote for in the next election?"

    www.myspace.com/fightingfiction "A lesser of two evils"

  • Comment number 69.

    66. At 2:40pm on 23 Oct 2009, icewombat wrote:



    You must remember the 4Billion this year and the 7Billion next and all follwoing years was down payment for Blair to be EU president.

    A good investment then. NOT.

  • Comment number 70.

    Fascinating arcticle at http://news.bbc.co.uk/1/hi/world/europe/8321967.stm

    "A group of rich Germans has launched a petition calling for the government to make wealthy people pay higher taxes.

    The group say they have more money than they need, and the extra revenue could fund economic and social programmes to aid Germany's economic recovery.

    Germany could raise 100bn euros (£91bn) if the richest people paid a 5% wealth tax for two years, they say."

    Exactly what is needed here too. Any chance of British multi-millioaries making the same offer?

  • Comment number 71.

    #61. FrankSz wrote:

    "systemic" = somebody-else's problem! ???

    These "experts" only know bubble economics and this explains why they are simply unable to conceive of any solution that is not a bubble economy. Their 'expertise' just isn't! (I think that that was the point you were making?)

    I don't know I share your view of the future of "wholesale misery". Misery as a condition is relative - an American deprived of his air conditioning is a miserable person, whereas a destitute African offered an American's home would be in seventh heaven. What your projection suggests is that we will not have come to terms with the conditions of our life (or lifestyle - but I hate the word) within 5 years. Perhaps 'retail misery'? Whether we are miserable or not depends on whether we have come to terms with our economic condition, or not, and that is a bit about how well the hair shirt is marketed! If we can forget the economic bubble and fantasy of the last decades and be content with the slower pace of life then we will be happy. I hope the we can make ourselves happy. My recipe is for what it is worth: live with walking distance of where you work, see travel as something to be avoided (especially air travel), exercise practically at gardening (for example), always spend less than your income and be generous with you time to your friends and family. The glass is half full rather than half empty!

    Perhaps the unhappiest and most miserable people in five years time will be those who see a change of government as the instant solution to all their, and our, woes!

  • Comment number 72.

    Funny enough only the other day I wrote to someone about trusting figures from Britain. Simply one cannot! Every old gaffer and his dog can give better predictions and forecasts. He doesn't need 'the signs' or 'the analyses'. That's just techno-hype. It comes from "who believes us" and of "what we do". Unfortunately this and previous Governments have been selling the lead off our roof for years and all we're left with is some tacky mineral-felt to see us through a darned tough winter. Again metaphorically speaking, it will be the reserve and the grit of the 'coal-face workers' that will drag the UK through, just as they have always done. Get your coat Brown and go home!

  • Comment number 73.

    @danj180

    "Lets just pray it doesn't lead to the reemergence of the far right as was the case in the 1930s."

    And what planet were you on at 10:35 last night?

  • Comment number 74.

    Man walking along a road in the countryside comes across a shepherd and a huge flock of sheep. Tells the shepherd, “I will bet you £100 against one of your sheep that I can tell you the exact number in this flock.” The shepherd thinks it over; it’s a big flock so he takes the bet. “973,” says the man. The shepherd is astonished, because that is exactly right. The shepherd says “OK, I’m a man of my word, take an animal.” Man picks one up and begins to walk away.

    “Wait,” cries the shepherd, “Let me have a chance to get even. Double or nothing that I can guess your exact occupation.” Man says sure. “You are an economist for a government think tank,” says the shepherd. “Amazing!” responds the man, “You are exactly right! But tell me, how did you deduce that?”

    “Well,” says the shepherd, “put down my dog and I will tell you.”

  • Comment number 75.

    74 - that's a good one. The following speaks for itself - when shares in Caspian Holdings (bought by moi on a whim some years ago)recently rose from 0.3pence to 1.5pence the directors issued a statement to express their surprise and to assure their shareholders that nothing had changed since their previous update. Internet gossip/rumour between traders, which I easily accessed through Google, would appear to have been the reason for the rise. The moral of this tale is that the directors of this company are the same engineers who found the oil ,drilled the oil wells, invested their own money time and effort , fought and lost the legal battle with the Kazakhstan authorities. These are the sort of entrepreneurs that deserve our investment even if they make a loss.

    I was interested to see that CBI which presumably has the interest of British business at heart consists of accountants. Where are the entrepreneurs? the designers , the engineers, the talent of GB.

  • Comment number 76.

    those economies who have come out of recessionwent into it more deeply and have come out because1. they agreed with gordon brown's stimulus policies and are reaping the rewards as we will
    secondly unlike here the banks in those countries have not strangled companies by withdrawing borrowing facilities for no reason other than their own incompetence still loads of simpletons on here blaming brown for everything and refusing to reciognise that the traditionally tory supporting banking sector has been and still is the main cause ofboth the payments deficit which will be put into sensible proportions when the banks pay us back what they owe when they up lending to business and hoe owners the economy will recoverif you want to ignore where the problems are blame brown, cut public spending and go into slump

  • Comment number 77.

  • Comment number 78.

    The main reason the UK is still in recession is its over dependency on the financial services sector, compare this to France, Germany, Japan which have a much bigger contribution to GDP from there respective manufacturing sectors.
    The myth that a western economy can survive on service industries like - tourism, banking, insurance has just been busted. Sucessful economies manufacture products, thats a fact!
    The UK companies have systematically transferred this work to low cost countries again to acheive cost reductions and get bonuses for the management team.
    Its a bit like the house of cards, remove the bottom layers and the pile of cards above start to fall. Its simple logic, the trouble is you can now physically see it happening before it was masked by the credit boom.

  • Comment number 79.

  • Comment number 80.

    BEFORE.
    Making products = making money, easy credit = selling products.

    NOW.
    No credit = no sales, no products required = no employment.

    China makes products , they are booming !
    UK, USA western economies are broke bankrupt!, the companies have brought it on themselves by outsourcing to China & Asia.

    My advice to any UK worker move to China they want your skills !, leave all the paper shufflers in the UK and USA. They will be the ones struggling from now on!

  • Comment number 81.

    Not too many people can answer this question. What is the name of St. George's mount?

    Answer - http://www.sysopt.com/forum/showpost.php?p=1486730&postcount=37

  • Comment number 82.

    IMHO we should ignore any talk of 'recovery' whilst jobs continue to be lost, debt continues to spiral out of control, and public services are about to be slashed. GDP is an outdated measure of a nations overall well-being (economic, or any other form of well-being for that matter), and using it to signal the start of a 'recovery' is not only futile but misleading.

    Printing money and spin are not working, public services/jobs are about to be slashed and 'recession' to 'depression' is already starting to happen ... take a look at http://poweromics.blogspot.com/2009/10/recession-and-depression.html for instance ... traditional economics is dead ... and a new set of values, politics and economics, will be needed to stop the UK ship from sinking ...

    But do most current 'leaders' understand this? For those that do, are they prepared to do something about it?

    I think most people in the blogosphere already know the answers to these types of questions, and the situation is going to have to get a whole lot worse before the people of this country decide to do something about it.

  • Comment number 83.

    Stephanie:

    Thanks for giving the community the information
    regarding the First Draft of the United Kingdom Economic
    History.

    =Dennis Junior=

 

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