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Is Britain growing yet?

Stephanie Flanders | 13:31 UK time, Wednesday, 4 November 2009

Is Britain growing yet? You would think the Bank's Monetary Policy Committee would like the answer to that question before deciding this week whether to keep injecting tens of billions of pounds into the economy.

Like many City forecasters, the Bank was fairly sure that the economy had come out of recession in the third quarter. That official estimate of a 0.4% decline in GDP, announced on 23 October 23, was a surprise to the MPC as well. We will find out in next week's Quarterly Inflation Report whether the Bank is revising its view - or rather waiting for the ONS statisticians to revise theirs. And of course, the Bank's policy-makers will have those new forecasts in front of them at their meeting.

You'll remember there was a lively debate about the reliability of the figures on the day they came out - much of it stirred by Ben Broadbent and Kevin Daly at Goldman Sachs (see my earlier post, First draft of UK economic history). If anything, the discussion has heated up since then, with the release of fresh data also seemingly at odds with the ONS view.

The CIPS/Markit UK manufacturing survey of purchasing managers showed UK manufacturing activity at its highest level in two years. Today we saw the fourth consecutive monthly rise in the service sector PMI as well.

As the CEBR pointed out, this is also the sixth month in which the index has been above the neutral mark of 50.

Folks at the ONS point out, rightly, that they are basing their estimates on hard data, whereas the critics tend to highlight mainly surveys. Graham Turner of GFC Economics added his voice to that debate today, stating his view that the PMI surveys have been systematically overstating the strength of the recovery, not just in the UK but "across the industrialised bloc".

For example, the various ISM indices suggest that the US manufacturing output has turned up rapidly, but in reality, "production has risen only 3.5% from its low point in May, and remains 13.8% below its peak."

Turner thinks the problem might be even more pronounced in the service sector surveys, because they have much lower coverage than the ONS among smaller companies, and there is evidence that it is the smaller firms that have been most affected by a decline in the availability of credit.

All of which might be true. But I guess if you think (as the critics do) that the PMI surveys often turn out to be closer to the final official version of economic reality than the ONS's own official estimates, simply to point out that the surveys are at odds with early estimates of (say) manufacturing output rather begs the question. And, as Turner admits, it's not just the PMI survey data that seems out of line. The CBI, BCC and other surveys are also at odds with the ONS.

ons prelim gdp estimate much weaker than other key indicators

(Apologies for giving so much space to Goldman Sachs on this debate, but they seem to me to have mounted the most robust critique of the figures to date. I'd be happy to hear from others who feel they have something to add).

There's also the fact that employment, extraordinarily for this stage in a recession, is flattening out, or even going up. As Charles Goodhart pointed out at Fathom Consulting's Monetary Policy Forum on Monday, this suggests that firms are taking on workers, at a time when output is falling - just the opposite of what you would expect.

Charles Goodhart

The ONS's own official estimates for expenditure have also been weaker than the output numbers. Unlike many other official statistical agencies, it doesn't fully incorporate this data into its final GDP estimates for a year or two. That's when all the big revisions tend to be made.

Unhappily for us - because it means this tremendously important debate about whether or not the UK is already out of recession may not be resolved until 2010 - or even 2011.

As this chart shows, those final revisions made a big difference in the case of the early 1980s recession. And others too. Goldman Sachs calculates that of the 29 occasions between 1975 and 2007 on which the initial estimate of GDP was negative, the average revision has been a stunning +1.0% quarter-on quarter. In other words, if that average held true of the past two quarters, Britain might turn out to have gone out of recession six months ago.

Early 80s recession seemed much worse then than it does now

Now, no-one (I know of) is suggesting the revisions will be that large. Indeed, the ONS might even revise that 0.4% decline downwards a little next month, because of slightly weaker than expected construction data. But the eventual version of history - one or two years down the road - could well be quite a bit brighter.

As for the folks at the ONS - well, they appear unperturbed. In their view, the surveys are often at odds with the official picture, and there is no unusual discrepancy with other data to be explained.

They are certainly not going to be swayed by the opinions of city economists, though privately they are puzzled as to why respected forecasters such as the Bank of England and the NIESR were also expecting something better.

But even if the Bank does think the ONS figures might be over-gloomy, it will not change their basic view that the recovery - regardless of when it turns out to have started - will be slow and uneven.

In the end, it is that longer-term prognosis that will matter most for the future of UK monetary policy.

Update 17:50: I've said that much of the debate, in effect, comes down to whether you trust the official output data or the surveys. Obviously the ONS data has the advantage that it's based on solid numbers, reported to them by a much larger number of companies across the country.

The surveys are often more "qualitative"; they ask firms more general questions about what's been happening to orders etc and what they expect in the future. On the other hand, they have the advantage of being more timely than the official data, which is why some see them as a better guide to where the economy is right now.

The director of the NIESR, Martin Weale has alerted me to a paper he and three colleagues have just written, available on the NIESR website [375KB PDF]. It looks at whether there is a predictable relationship between the answers that firms give in the CBI's Industrial Trends Survey, and what they tell the ONS. The paper's technical, but the main conclusion is that, where you can line up the two sets of answers against each other, the CBI survey doesn't give a more timely indication of what's happening to output than the ONS survey.

Specifically: "firm-level qualitative data do not provide a good coincident indicator of growth." And the CBI survey "has little role to play in enhancing our knowledge of what has happened to manufacturing output. However, where the CBI is asking questions not covered by the ONS - about future export orders, for example, the authors do find that the CBI survey provides some useful information.

Unfortunately they were not able to get the data to analyse the PMI surveys in the same way. But economists who think that people are making too much of the PMI surveys do point out that today's PMI surveys weren't around in the early 90s. We can't be sure that their predictive powers still hold when you're talking about an economy coming out of a recession (or not).

Clearly we've not heard of the last of this debate.


  • Comment number 1.

    respectfully i think its fairly irrelevant whether the economy is growing or declining by c0.4%. Natural ecomonic growth i believe is still around 2% per annum, so even a modest growth will increase the excess capacity in the economy, or put another way increase the unemployment of resources including labour. It may be interesting to know how far the UK is operating from both its peak and capacity

  • Comment number 2.

    Given the huge (theoretical) stimulus delivered by QE the debate about whether or not the economy is growing is INSANE. Lets see what happens when the public sector starts cutting costs and QE is withdrawn and THEN lets look for real growth NOT the growth caused by policies that will weigh on our descendants for at least a generation.

  • Comment number 3.

    Stephanie, thank you so much for the correct use of "begs the question" :)

  • Comment number 4.

    To paraphrase Mervyn King paraphasing Winston Churchill;

    `Never before in the field on human endeavour have so many green shoots been sought by so many.'

    It is starting to become a bit like the first cuckoo in spring syndrome.

    From where I sit the clouds are darkening. Perhaps we will have rain that might eventually bring forth new grass on which the cattle can feed next spring. In the meantime we must sustain ourselves through what will be another long winter.

    I am sorry but I don't see any sign of a recovery out here in the real economy. In point of fact I am going to be very nervous throughout the Christmas period and expect more closures and lay-offs in the New Year. I am looking for signs that it is not getting worse, rather than signs as to whether it is getting any better.

  • Comment number 5.

    #1. Kudospeter wrote:

    "..I think its fairly irrelevant whether the economy is growing or declining.."

    So do I. Except in so far as the 'wise men' who run the economy will decide on their policy dependent on the result. And their erroneous policies have helped create the bubble and are now deepening the bust. The only thing they know is how, through the action of inane policies, to create a new bubble.

    These are the very same 'wise men' who regulated the ballooning of the bubble - who have not yet been sacked, as they should have been (Mervyn King - with his 5 million pound pension pot - etc. His rate policies created and inflated the bubble and his bonus hasn't been touched!)

    The only good thing that a revision upwards might do is to scotch talk of even more quantitative easing and hasten the day when interest rates are again pricing money at a more sensible and appropriate value (i.e. 5 per cent plus).

  • Comment number 6.

    If we are imbuing this statistic with such significance, why is it not produced monthly for the previous three months?

  • Comment number 7.

    "As for the folks at the ONS - well, they appear unperturbed. In their view, the surveys are often at odds with the official picture, and there is no unusual discrepancy with other data to be explained."

    In your last contribution, you cast doubt on the empirical validity/reliability of traditional economics, and rightly so. In this contribution you refer to debates, focusing on the validity/reliability of evidence, but isn't there a major problem here? What's being measured? How valid/reliable are any of these measures? In the surveys, how random are the samples and how large are they? What are the completion/return rates? Without knowledge of all of that, the figures should mean very little, to any responsible reader I suggest.

  • Comment number 8.

    This is much ado about little. It will take several quarters of statistics for any conclusions can be drawn and probably over a year before anyone can say the recovery is sustainable (until the next implosion!)My confusion is about where is the growth (if it is here)is coming from and to where are we recovering - reduced public expenditure, resumption of indebtedness, export led growth, trickle - down from renewed bonuses. My comfort point for the end of recession is when there are regular substantial fall in the unemployment totals.

  • Comment number 9.

    Come on let's just tell the truth! There is NO growth in the UK economy. There may be a little taking-up of slack but there is no true extension of economic activity i.e. growth.

    Many will look for signs of recovery, others will trumpet even the slightest hint of recovery, others still will try to 'talk-up' a recovery but none of them can actually discerne a true and lasting recovery. The UK economy lies dead in the water waiting for the next weather front to effect it for better or for worse. All the rest is just wistfull thinking.

    The World economy is in the same situation. Trillions have been expended to save the patient but the real illness has yet to be addressed.

  • Comment number 10.

    Hi Stephanie,

    Adam Posen says " The functioning of the UK financial system is therefore of importance and direct relevance to the
    work of the Monetary Policy Committee, as I understand our duties. A banking system as we
    have in the UK today, with large segments still in public sector hands, a high degree of
    concentration of assets, and still needing capital (though progress has been made on that front) is
    a structure that bodes poorly for the sustainability of the coming economic recovery. It also is a
    structure that could impede the return of trend growth in the UK to its previous rate, and which
    could if things worsen put on persistent deflationary pressure (as the ongoing banking structural
    problems did and do in Japan)."

    Isnt the state of the credit markets and QE disfunction the real issue for the MPC.

    I find the debate on GDP stats typically of interest to ivory-tower dwellers.

  • Comment number 11.

    What is growth? - that should be where you start.

    The problem is the technical analysts only understand quantifiable numbers - i.e. simpleton stuff like GDP.

    This only measure the monetary value of production which to me isn't what all growth is about.

    A pepper plant may grow very high in a season, but the fruit it produces might be poor quality and tasteless - conversely another might not reach such heights but produce a wonderful harvest of fresh ripe peppers.

    If we stick the analysts version we can see in the same way they 'technically measure' growth they also 'technically measure' lack of it. That's why the idiots think the US, Germany and France are 'out of recession' - simply because the numbers tell them they are.

    Recession is when capital is destroyed, jobs are lost and people spend less - this is what we're in the thick of. Just because a Government prints it's own currency and adds it to the measure - does not mean we're growing.
    The US are going to learn this painful lesson soon - they will learn that optimism over reality can be far more punishing an honest appraisal in the long run.

    They think it's all over - it's certainly not yet. Had any US Government official bothered to pick up an Economic history book they would know that it's when you take your eyes off the ball - you're most likely to get hit in the face with it!

    Enough cliches for now - lets ask the others if they can see growth - here's my account.

    I have witnessed over 100 redundancies in the company I work in this year - from a workforce of about 600 - that's 1/6th that's about 16%. We haven't been hit anywhere as near as hard as others. Most of these are still out of work and are now low on savings to pay their way.
    The consequence of their unemployment is reduced spending - which hurts the shops and other consumer led industries.

    I do work in the city - so this view may be skewed, but I also know others who do not work in this industry who are now struggling to find work - areas outside London are hit the hardest (which is why the 'london-centric' politicans cannot see from their tax payer funded city flats)

    Unlike the 'experts' - I can explain the employment figures. First we had the 'shock' where mass redundancies were like a knee-jerk reaction, then we had the bubble recovery - which has lulled the employers in to a false sense of security and recovery (so they start re-hiring) - sadly this will end soon and those taken on will have to go again - at greater cost to the business owner - potentially pushing more under.

    The real tragedy is mistakes are being made because people continue to put their faith in Governments - all of whom are 'talking the talk' but none will be able to 'walk the walk' as someone will have to pay for all this stimuli - and that's when the pain will restrict growth in the long term. Tax cuts, public spending cuts, strikes and reduced benefits will all add to the problem.

    So much policy is guided by GDP and yet it's relevance is clearly tainted if it can be manipulated in this way by Governments. I'm expecting the MPC to pull a 'surprise' out and expand QE - not that this is really a surprise, the markets are already pricing it in and if it doesn't happen there will be sad faces around the city. However politically, expanding QE sends the wrong message out as the Government are talking about recovery but the BoE would be acting in a very different manner.

    I actually believe it's an advantage in the UK that we didn't have a positive GDP last quarter - we're dealing with reality (or closer to it) than our American cousins who are falling straight into a Bull trap.

    Remember - you can't lie your way out of recession

  • Comment number 12.

    You can argue about the figures all day long, but we won't really know until AFTER the event.

    Your obviously related to Alistair Darling as you keep spinning that this recession is not as bad as 1979/80. I might be wrong but I don't believe the Tories spent £175 billion printing money or even another £200 billion (My own forcast I don't believe Treasury figs) on public spending we have no way of paying for.

    No matter how you /Alistair /GB spin it, we are without doubt in the worst financial mess EVER. Hopefully in June we will have a change of government, common sense will prevail and companies will have confidence in investing in a real economy, not the Disney World we are currently in...

  • Comment number 13.


    aren't we all just living in a Phoney war pre-election illusion.

    Whether we are technically in or out of recession doesn't matter.

    The elephant in the room is the debt mountain and the measure that will have to be taken to get rid of it without loosing the bond markets.

    Labour will not reveal the elephant and will pull every leaver so that it will only come to light after the Tories win power so that they can be blamed.

    In 12 month time it will be there for all to see and GDP and every other measure will be blown to the 4 winds by the impact on the economy.

    We have not yet reach the day of reckoning but its coming straight after the election.

    Hang on to your hats

  • Comment number 14.

    I remember - I was a government economist then - reckonong that the first estimates of GDP in early 1980 would be revised upwards. It was no surprise; we were used to one of the most difficult things about economic forecasting being the estimate of the values the forecast should start from.

    The truth still is that in no economy are the first GDP estimates good enough to give you more than a rough sighting shot at GDP levels. And more often than not, the trend between the two most recent quarters is influenced by the revisions to last quarter's estimates. Policy just has to be made against a background of that degree of uncertainty; and policy is likely to be less mistaken if it faces that uncertainty.

    So is the UK economy growing? Well, it is clearly moving towards renewed growth.

  • Comment number 15.

    .....sure, you can't lie your way out of a recession just as you can't borrow your way out of one either.
    Rising unemployment and increased savings. Whilst it is a while since I studied Economics at college, I don't remember a jobless, spendless recovery. I do, however, remember the impacts of printing money and zero interest rates.
    Could it be the PM is just trying to buy time before the next General Election? Surely not.

  • Comment number 16.

    But is it a "tremendously important debate about whether or not the UK is already out of recession" or is it an arbitrary academic abstraction?
    You say "If that average [revision] held true of the past two quarters, Britain might turn out to have gone out of recession six months ago." and if it and previous figures were revised a whole lot more, would we never have had the recession? Would that make any difference to the jobless figures or the mess we're in?
    This, perhaps, cuts to the heart of the problem mentioned in your previous post. The tight focus on the numerical outputs of these varying models tells us something, but that something is hugely specific and that specificity is nearly always forgotten. The numerical accuracy of the outputs often tends to be very (too) persuasive but very often is not showing what is implied.
    The focus on the above debate takes mindpower away from the perhaps more "useful" questions of how to fix the problem and how to make sure it doesn't happen again, as opposed to attaching arbitrary numbers to real events. The idea that we need said numbers in order to predict the future is clearly flawed (in that it never works)

  • Comment number 17.

    Few understand statistics.

    Inflation over the last 6 months is running at about 4% p.a. but the year on year figure is currently negative. Over the last 6 months therefore constant performance would, in principle, show as a 2% increase in pure money terms. Would this be reported as 2% growth (I think it would but perhaps someone could confirm)? If so then near-zero growth is pretty bad for current conditions. Growth figures are definitely influenced by inflation.

  • Comment number 18.

    I guess this is about who you ask. The bankers have been doing very well. The shop closings and unemployment increases are another matter but of course they don't count with the people who are counting.
    A slowing down of a falling lift is considered a postive sign...won't smash the bottom so hard, will kill some but not all. Nothing has changed regarding banking regulations and nothing has changed about their elected handmaidens, from both parties. They just want to all be positive until everyone forgets about the money the banks stold from them and their reduced retirement accounts. When things do get better the same people will be in charge with the same rules and the same results will be repeated as soon as the accounts are repopulated with enough to steal. The message seems to be: The banks gambled away your money for greed, the elected helped them do it, so get on with your life, nothing is going to change.

  • Comment number 19.

    Anyone else fed up with graphs, statistics and 0.something percentages.
    They mean absolutely nothing outside academia and the city of London.
    Surveys and reports are just the cities way of creating and keeping jobs for the boys. They add no real value to the overall economy whatsoever, yet cost thousands upon thousands to produce.

    The only thing that people in the real world care about is whether they have a job, are likely to keep it and will they get paid.

    Who funds such reports? I believe that when a report is published, by law, they should be made to reveal who paid for it. Perhaps then these reports will hold less weight and force journalists do what they are paid to do - report the facts and not try to force their opinion on others.

  • Comment number 20.

    11. At 4:19pm on 04 Nov 2009, writingsonthewall wrote:

    Very well put.

    A bit like: "Computer says yes"

  • Comment number 21.

    No 6 "If we are imbuing this statistic with such significance, why is it not produced monthly for the previous three months?"

    Have you tried collecting, collating and analysing such widespread raw data into "facts" ?? Just the timescale for collection alone probably takes a month !!

    This is not "Harry Potter and the Magical Statistics Machine" !!

  • Comment number 22.

    No 7 "Without knowledge of all of that, the figures should mean very little, to any responsible reader I suggest."

    In other words - Parameters !! What are the parameters ??

  • Comment number 23.

    No 14 "So is the UK economy growing? Well, it is clearly moving towards renewed growth."

    Until the restructuring of the nationalised banks fire enough staff and foist Britain's biggest toxic dump on the taxpayers !! Until GM can't get the government aid it need and has to close plants because they kicked the Germans in the teeth and thumbed their noses at the Russians and the Canadians !! Until all those lovely interests on government debts come due and there's no money in the kitty to pay them !!

    Until then, we can still pretend there is growth instead of robbing our descendants to create a facsimile thereof !!

  • Comment number 24.

    Crikey Steph, that was a bit of a dry posting, all good intellectual exercise but what is the significance?

    By the time we know the real numbers the unavoidable tax rises and spending cuts will have started to kick in so it will still feel like recession.

    For what its worth i predict a single quarter of nominal growth just in time for christmas followed by a period of flatlining (it could go either way quarter on quarter) followed by renewed contraction in the fourth quartyer of 2010.

    You have no idea how much of a fun conversationalist I am at the moment at the pub on a friday.

  • Comment number 25.

    Are we not in danger of putting too much money into the system and run the risk of bankrupting the country as happened in France?

  • Comment number 26.

    According to

    Consumers have minutely reduced debt

    According to

    In September, the national debt was approximately 57% of GDP
    A year ago it was 44%

    The only growth is government debt, everything else is spending.

  • Comment number 27.

    We manufacture flexibly on a small scale and sell direct over the internet worldwide into both hemispheres. We have very close contact with our customers who in goodwill effectively market what we do for us, a form of viral marketing. We have had steady growth throughout this mess but have noticed the UK consumer in general has been hard hit.

    Here we saw a scaleback on purchase size occurred with an increased interest in value and deferments occurring. This might sound odd in a growth situation but we know where the curve was heading and where it went. The US and UK markets have both become more active recently. Some reports from other businesses have been recieved that suggest Europe is buying raw materials but the UK is not. The UK seems to be in the worst state but the consumer group we deal with seems in general more comfortable recently, which I would put down to aclimatisation, more than any great chnage in circumstance.

    If the UK is in the worst position, which seems a reasonable proposition until proved otherwise, then growth is going to be slow, knocked back by redundancy in the system and low confidence levels. I cannot imagine anybody saying the UK was best placed. Oh no, thats wrong, somebody did didn't they.

    Realistically the bank interest rates are well into double digits for many. Prices will rise, are rising. There is no way around it. Imports have risen, efficiency in the supply chain has dropped due to lower volumes. Fire sales must run out sooner or later. Businesses holding on to get through will put prices up when their competitors go under. Or turn work away because they are suddenly too busy. Shortages are due, already showing up.

    It is all a question of consumer confidence. The behaviour of customers in countries less affected by the recessession than the UK, such as Australia is quite different than the US or UK. There are people in the UK to all intents and purposes unaffected, even benefiting from holding a secure job and accessing low interest rate mortgages. I fail to see how anybody can look at the UK and come to any sensible conclusion as there are conflicting effects from the recession and therefore differing outcomes from different experiences. This is the mixed outcomes seen in the Japanese experience. Policy and practice do not act uniformly so responses are not uniform.

    There is little sign of the banks functioning normally. Until they do things are going to be messy. That is the overbearing problem the UK faces. Personally I expect this to take years not quarters. Until then any uplift is in spite of the government and banks who are both far too consistent in their actions. I would not want to see anything I was doing being very dependent on the goodwill of a bank. I doubt I am alone. So its not a hard guess to propose that the banks behaviour to date will result in a reduced willingness to borrow heavily and therefore expand at the max in the future.

    The public sector critical mass appears to remain egotistical - comments such as 'We cannot let this happen' when cuts are proposed. When a downsize bites, which it has to, it will be a messy business. When a percentage are told it is time to let them eat cake in the french style, it will be difficult for some to swallow. None of it will help consumer confidence. Not a conducive atmosphere.

    So it is difficult to see any great uplift pending in the UK, from my point of view. The GE may help, a purging of history with the current high command, however some supporters appear to remain supporters come what may, so who knows.

  • Comment number 28.

    GDP R.I.P.

    GDP is an out of date measure of the well-being of an economy* ... and is now just a flawed statistic/target a failed leader is trying to 'pin his spin' on ... i.e. "I saved the UK, but look what 'they' did afterwards" ... all still complete garbage I'm afraid ... this Government's policies are responsible for the UK's demise, not America** or anyone else for that matter ... and they are deferring all the pain until they leave office so someone else gets the blame as the built-in 'double-dip' kicks in (nb christian/moral values - I think not !!!) ... I also agree with the comments made in post 11.

    * Take a look at for instance.
    ** e.g. ake a look at

  • Comment number 29.

    Surely one problem with surveys is that they are by definition only asking those companies that are still in existance, and ignoring those that have just gone bust. So naturally the result will be skewed on the positive side - especially duiring a major recession when companies are going bust all over the place.

    On a separate note, as I've said before we should exclude all data from the financial sector (banks in particular) in these figures, as we know full well that their profits are just "funny money" and not based on any real production of "socially useful" goods and services.

  • Comment number 30.

    'Is Britain Growing Yet ?'


    In actual fact it is grinding to a halt.

    Only the rate of deceleration is slowing.

    'We stretch the frozen moments with our fear'

    Nothing has been done, no action has been taken, no clear vision as to where we want to be has been illuminated.

    Why can't we cure poverty in the 4th biggest economy in the world ? is it simply that those in charge are not trying hard enough ?, where is their shame ?

    What is wrong with those in the ivory towers of the HOC, don't they know that people are dying out here whilst they eat cake ?

  • Comment number 31.


    "There's also the fact that employment, extraordinarily for this stage in a recession, is flattening out, or even going up. As Charles Goodhart pointed out at Fathom Consulting's Monetary Policy Forum on Monday, this suggests that firms are taking on workers, at a time when output is falling - just the opposite of what you would expect."

    If the trends showed a decline in salaries such that total volume of salary paid was declining despite any increase in number employed, that would be just exactly what I would expect.

  • Comment number 32.

    On the same note, what I have observed is this (in chronological order):

    a) Large company faces credit crisis, fall in profits, increase in risks
    b) Large company cuts ties with external suppliers and contractors, as these are expensive
    c) This results in several hundreds losing their contract positions and if applicable lose jobs at 3rd party supplier
    d) Large company discovers it does not have the capacity to deal with internal changes and operations
    e) Large company hires FTEs, but continues with a policy of firing in other departments

    The fact that people like Charles Goodhart have the opportunity to spout their academic claptrap all over the media while the more informed involved in the daily evolution of this thing do not is a sign of hopefully former times.

  • Comment number 33.

    No 26 "The only growth is government debt, everything else is spending."

    Well, at least they can put hand on heart and say there's growth in the UK !! They just didn't say what !! :-)

  • Comment number 34.

    No 30 "Why can't we cure poverty in the 4th biggest economy in the world ?"

    Actually, according to the IMF figures, Britain is the 6th largest in terms of *nominal GDP* and 7th largest in terms of Purchasing Power Parity !! This does not account for the masses of debts that have to be serviced and replaced !!

    However, since these figures were published in April 2009, much had occurred and not for the better. Britain is probably gone down that "league table" quite a few steps !!

  • Comment number 35.

    Ni 31 Frank - "There's also the fact that employment, extraordinarily for this stage in a recession, is flattening out, or even going up. As Charles Goodhart pointed out at Fathom Consulting's Monetary Policy Forum on Monday, this suggests that firms are taking on workers, at a time when output is falling - just the opposite of what you would expect."

    The more pertinent question to ask here is - where did they get the employment data from ??

    If they are saying that the data is from tax and NI receipts, then there might be some truth in that statement !! However, if they got the data simply by looking at a fall in unemployment figures, then the whole thing is a massive fudge by this government who blew billions on getting school leavers and other unemployed into "training courses" so that they will *NOT* be counted as *unemployed* !! This *DOES NOT* mean that they are *EMPLOYED* !!

    None of this has anything to do with growth in whatever shape, form or manner !!

    Lies, damn lies and NuLabour government statistics !!

    As had been unintentionally pointed out in the article, the economists will be endlessly *debating* "how many angels can dance on the head of a pin" even as Britain burns !! All talk, no action !!

  • Comment number 36.

    The deception is certainly growing.

    It seems that people don't realise that creating more debt will not solve a crisis caused by debt.

    Until that fundamental problem is addressed, all talk of economic growth is just lies.

  • Comment number 37.

    "In our own unusual indicators series for the previous three months, the growth in sales of baked beans had been starting to slow and sales of emulsion paint were recovering, which were taken as signs of recovery."

    "unusual" is the operative word here !!

    "Paint sales are a good indicator of the state of the DIY market, because almost all projects need some paint, and also the housing market because people tend to paint their houses just before selling them and just after buying them."

    Assumptions, assumptions, assumptions !! People also paint their houses because they *cannot* afford to more to a better home !! Conclusions based on false premises are worthless !!

    "Baked beans are considered, in economic terms, to be an inferior good, which means that when people have more money to spend they will tend to spend less on beans, so slowing growth in bean demand was taken as a sign of an upturn."

    Again false premises !! Has the illustrious BBC business reporter not realised that people are buying more and cheaper foods than processed stuff which are usually far more expensive (because of their processing) than fresh foods ?? Or does he spend so much time dining out in fine restaurants that he has forgotten about how home cooking is run ?? Try looking at the sales of *bread, potatoes and rice* !! These are the staples and will give a better indication of the state of the economy !!

    When money is tight, even baked beans are a luxuary !! Perhaps well-paid BBC reporters do not know how tight money have become !!

  • Comment number 38.

    14. At 4:56pm on 04 Nov 2009, Diversities wrote:

    "So is the UK economy growing? Well, it is clearly moving towards renewed growth."

    Spoken like a true Government Economist - old habits die hard eh?

  • Comment number 39.


    Not sure if it's deception or delusion

  • Comment number 40.

    31. At 04:41am on 05 Nov 2009, FrankSz

    Agreed - now stop talking sense man and get back to some panicking!

    Too many economists get the employment behaviour and trends all wrong - I suspect it's because as 'academics' they have never been unemployed and therefore have absolutely no understanding of how it all works 'down there'.

    You're right, the workers are expected to pay for this crisis - and that will be either visible (job cuts) or invisible (less wages, longer working hours) - especially as the Government will want to resist the highly visible and unpopular tax rises (because the rich don't see why they should ever have to pay - hence tax evasion being rife the higher up the pay scale you go).

    The question is whether the (work)horse will have it's back broken and collapse or whether they can flog it to within an inch of it's life so they don't have to walk.

    Looks like OPEL workers think the back is breaking.

  • Comment number 41.

    37. At 08:03am on 05 Nov 2009, ishkandar

    The use of food shopping habits to determine economic status is impossible - even though I agree with your destruction of the stats - I would also argue that quite well off people will eat rice and pasta, firstly as a health choice and secondly as most people continue habits that they start with - no matter what their future wealth (I still eat rice and pasta even though I could afford to eat steak every night)

    I think the sales of offel and giblets etc give a better indicator of wealth, the cuts from the butchers that are less popular (lamb neck for example) - but even that's not reliable as many older generation have never stopped eating these bits.

    Food trends also do not take into account the fact that some people are unable to cook (as some TV shows demonstrate) and therefore will have to continue buying ready meals - no matter what the price!

    The root of the problem is lying and deception - lying about jobless statistics (by hiding them) - crafty ones like letting people have their dole paid straight into their bank accounts and to allow less frequent signing on (so there aren't big queues outside the job centre) - even making the trip to the JC pointless (by having no jobs) - so you don't get crowds which make your policy look bad.

    The Government (and I mean all of them) think if they can fool us for long enough then the recovery will be here and we'll all go into the next boom and forget all about it. Sadly this is just like poker - if they get it wrong they will loose their.....sorry I mean our house.

  • Comment number 42.

    You can't really tell if the motor is turning until you take your hand off the ignition switch. Until then, it's only an illusion of motive power. When this external stimulus is removed, then we will see if there is life in the old banger yet. At some point the engine will fire again and the rust-bucket will limp along the road, but what it really needs is a good service - or preferably a rebuild.

    The unemployment statistics are flattering to deceive. We have a very large percentage of the workforce now in the public sector, and to date there has been very little impact on the Government payroll because they have not got to grips with the gargantuan deficit. As the Government (either pre- or post- election) finally addresses this deficit, then cuts in Govt spending will cause a large rise in public sector job losses. The private sector will not be able to absorb those in short order, due to the fact that they have been holding on to staff (preserving jobs and holding down wages), so they have spare capacity anyway, and due to the weakness of the impending recovery.

  • Comment number 43.

    No one should even think of bonuses until a long term recovery from recession is in place.

  • Comment number 44.

    Hi Stephanie again,

    Dr Deanne Julius of the esteemed Chatham House was also at the Fathom event. Didnt she say that she saw no real evidence that QE was helping the real economy. She did see evidence it was helping the financial sector and helping Government surpress interest payable on gilts,but she said that really wasnt what its purpose was.The real purpose was to help the real economy and she didnt see much evidence of that.

    Suprised you didnt mention this rather important view from this heavy-weight which the general public might want to know about.

  • Comment number 45.

    Is Britain growing yet?

    Good question

    Growth matters for those [mostly "for Keynes" silly QE'rs] that wish to carry on upping the AAA's hole using electronic dydl doe.

    They should be castigated ,hanging is too good for them!

    All Kings whoresies and all kings QE'r men are still pretending that they wish to get humpty dumpty together again ....if so ,it'll be the first time that they've willingly gone to work on an egg, albeit their new monthly wreckovary meeting

    Dont expect the patter of little feet from their sell division anytime soon unless it be ducky ones... Quack Quack!

  • Comment number 46.

    43. At 10:33am on 05 Nov 2009, Hyder wrote:
    No one should even think of bonuses until a long term recovery from recession is in place.
    ----------------------------------------------------------------------------------------------Bankers and pollytitians lie back and think of AAA's holes [their bonuses are automatic]and monthly wreckovarys]

    When that fails they will revert to dolly the sheep and cloning.

  • Comment number 47.

    Britain is growing financially more stupid.

  • Comment number 48.

    47. At 11:04am on 05 Nov 2009, bankingballs

    I love those short and succient posts.

    It's tragic that the biggest robbery in history has been played out in front of the world and only a small minority are aware of it.

    The rest place their trust in Government, Oligarths and Lords that their self-interests are shared.

    I heard a phrase recently which just about sums up the 'expanding stupidity' about wealth - it was something like this:

    "If you have a thousand pounds and you give it to a poor man then he will spend or waste it - however if you give it to a rich man he will make your 1000, 2000"

    Such is the glorification of the rich in this country the less well off actually believe tripe like this.

    This is how the banks do it - they make their world so confusing only they understand it - then they use that position to exploit the poor.

    I went to a building soc. recently to open and account - they tried to sell me a 'guaranteed bond' which would provide a whaking 12% - unfortunatley it wasn't made immediately clear this was over 6 years (averaging 2%) and if inflation is above 2% at any point in the nest 6 years you will in fact be loosing money in real terms.

    I understand this because it's part ofmy job - how does the man in the street get through this mire?

  • Comment number 49.

    No 40 "...and that will be either visible (job cuts) or invisible (less wages, longer working hours)..."

    You forgot the "work till you drop dead" pension scheme that is now being "eased" into existence by our caring government !!

  • Comment number 50.

    No 41 "I think the sales of offel and giblets etc give a better indicator of wealth,..."

    Sssh !! Don't say that to the East Asians !! They think offal are delicacies !! I get fed that stuff often enough by she-who-must-be-obeyed !!

    "Sadly this is just like poker - if they get it wrong they will loose their.....sorry I mean our house."

    They ?? What do you mean "they", Lone Ranger ?? It's us muggins, the taxpayers, who will lose our underwear !! Not them with their gold-plated pensions and massive expenses !!

  • Comment number 51.

    37. Ishkander

    "Again false premises !! Has the illustrious BBC business reporter not realised that people are buying more and cheaper foods than processed stuff which are usually far more expensive (because of their processing) than fresh foods ?? Or does he spend so much time dining out in fine restaurants that he has forgotten about how home cooking is run ?? Try looking at the sales of *bread, potatoes and rice* !! These are the staples and will give a better indication of the state of the economy !!"

    In my experience, fresh foods are actually considerably more expensive than their processed counterparts, as the processed versions have a longer shelf-life and so are easier for the supermarkets to handle.

    To tackle your specific example, I cannot easily think of a cheaper filling meal than a tin of baked beans and some bread, which also requires minimal preparation (as another poster says, many people have no idea how to cook). I can do that in 10 minutes, for around 50p, and that can be my one and only main meal of the day.

    How is this a luxury? Maybe you could give me another example which is simple, filling, and cheaper? I'm actually serious, I as much as anyone else would like to know how to save money in this climate.

  • Comment number 52.

    The problem with statistics is that for a complex system, such as an economy, the information on which the stats are based can either be complete but historic or incomplete but current. In the context of an economy the GDP figures are based on incomplete but current data. As such there is an inevitability that they will be wrong more often than they are correct which is why it is only several years later that fully correct figures are issued.

    As such recent GDP figures should only ever be viewed as a vague guide.

    Coming back to economy. It is likely that it will take us up to 10 years to get back on to a stable footing although the private sector may well have been growing for most of that time. Ultimately the political parties have yet to face up to the fact that in the modern world where businesses can move very easily, the concept of a public sector which is 45%+ of GDP in good times is no longer viable. My best guess (and it is a guess) is that we will need to cut back the public sector so that in good times it consumes 35% of GDP on the basis that in the developing world the equivalent figure is often 25% or less.

    This has a massive implication for what govt can do. This means cutting govt expenditure by nearly 25% compared to 2007 levels. This means that rather than cutting at margins govt will simply have to stop doing some things and leave it to the individual to fund. In other words we need real debate on what we expect from our govt.

    Ultimately this will allow for serious reduction in some taxes and probably higher consumption taxes. Corporation tax at no more than 25%, top rate income tax at say 33% and VAT at 20%.

    Personally I like the idea of flat income tax. No tax on say the first £15,000 and then 25% on everything above that with no reliefs (except for pensions). Merge capital gains into income tax and scrap NI.

    Downside is what will 250,000+ ex public sector workers do

  • Comment number 53.

    51. At 1:20pm on 05 Nov 2009, GordonThought

    Let's turn this into 'Come dine with me and Stephanie'

    Curry - you can make it with cheap meat and rice is very cheap to buy. traditional curry is made with mutton and meat on the bone, cooked for a long time in the sauce to tenderise the tough meat.

    Corned beef and rice - sounds terrible but you knock up some corned beef with curry powder, onions and some spices and you have an instant cheap meal - with taste.

    You can also save ££££'s if you're time rich but money poor by going to the supermarkets daily and picking up the fresh stuff that's going off today at a reduced price. It does mean daily trips to several supermarkets but it's something to do if your unemployed and at a loose end.

    Don't buy skinned chicken - it costs more and is for lazy people

    Go to the butchers for meat as you'll often find value is better as it may seem more expensive but the quality is far superior - most supermarket meats shrink as the injected water comes out in cooking.

    Grow your own - herbs can be done on a window sill, as can many other small vegetables. Once you start you will wonder why you weren't doing it years ago. Everyone wins except the supermarkets.

  • Comment number 54.

    52. At 1:20pm on 05 Nov 2009, Justin150

    I actually agree with the flat income tax idea - but I know what the rich will say....

    "Where's the incentive to work past 15k - I'll take a job as a dustman so I don't have to pay tax"
    ....which we know is nonsense, but somehow it wins the argument every time (I wonder why)

    I believe most people are happy to pay tax - it's their perception of what it is spent on that angers them - and that's often a cloud between the media version and the Government version - neither of which are reliable!

  • Comment number 55.

    NO is the simple answer;

    Just speak to small busnesses, the corner shops or the independant high street shops, sales have all but dryed up since September and order phones have stopped ringing.

  • Comment number 56.

    @ 41. At 09:37am on 05 Nov 2009, writingsonthewall wrote:

    ... "I think the sales of offel and giblets etc give a better indicator of wealth."

    This new measure will surely become affectionately known as "the OGGI" - the Offal & Giblet General Index - and before long we will hear the currently much-missed Mr Peston solemnly intoning on BBC news in his inimitable fashion that "While the FTSE sinks ever lower, some goooood news for retailers has been a sharp diiiip in the OGGI ...."

  • Comment number 57.

    It does seem that the CIPS surveys and many similar surveys that tend to be based more on sentiment/mood than on hard numbers to be over zealous, particularly when they express views of the future prospects.

    Firstly, there is the question of how well they remove survivor bias from these surveys when there is likely an acceleration in the losses of respondents from fail firms from the survey population.

    Secondly I think the note of Adam Smith rings rather loudly:
    "The over-weening conceit which the greater part of men have in their own abilities is an ancient evil remarked by philosophers and moralists of all ages. Their absurd presumptions in their own good fortune, has been less taken notice of. It is, however, if possible, still more universal. There is no man living who, when in tolerable health and spirits, has not some share of it. The chance of gain is by every man more or less over-valued, and the chance of loss is by most men under-valued, and by scarce any man, who is in tolerable health and spirits, valued more than it is worth."

  • Comment number 58.

    £25bn here, £25bn there... pretty soon we'll be talking about serious money. Given that lending to business has not hugely increased, just asset prices (eg in commodities and stocks), is it not clear what the banks are doing with our money - simply gambling it in the markets again for short term growth. Why can't taxes just be reduced by this amount instead? Ah yes, because the State and banks know better than us how to spend our money, and if it all goes wrong they'll all be able to retire on vast pensions and bonuses anyway. Shame our children and theirs will have to pay for it all...

  • Comment number 59.

    There are fundemental schisms today in the matter of what growth actually is and what it is for. This is chaotic. Push a button, destroy an economy.
    The equal sign, equals sign, or "=" is a mathematical symbol used to indicate equality. It was invented in 1557 by Welshman Robert Recorde. The equals sign is placed between the things stated to be exactly the same, as in an
    In programming languages, the equals sign may either denote a boolean operator to test equality of values (sometimes a double equal sign "=="), or it may denote an assignment. In some programming languages such as PHP a double equals sign ("==") denotes equality, meaning that the variables may not be of the same data type, but their values can be reduced to the same value. In PHP, the triple equal sign ("===") denotes identicalness, meaning that not only do the two values evaluate to the same boolean value, they are also of the same data type. For instance, the expression ("0 == false") is true, but ("0 === false") is not, because the number 0 is an integer value (whereas false is a boolean). JavaScript has the same semantics for ===, referred to as "equality without type coercion". However in JavaScript the behavior of == cannot be described by any simple consistent rules. The expression ("0 == false") is true, but ("0 == undefined") is false, even though both sides of the == act the same in boolean context. For this reason it is recommended to avoid the == operator in JavaScript in favor of ===. In Ruby, equality under == requires both operands to be of identical type, e.g. ("0 == false") is false. === is flexible and may be defined arbitrarily by any given type. For example a value of type Range is a range of integers, such as (1800..1899). "(1800..1899) == 1844" is false, since the types are different (Range vs. integer); however "(1800..1899) === 1844" is true, since Range defines === to mean "inclusion in the range". Note that under these semantics, === is non-commutative; e.g. "1844 === (1800..1899)" is false, since it is interpreted to mean integer === rather than Range === .
    If you are going to apply abstract corrections to a real economy, you had better make sure you remember to balance the equation(model), unless of course you believe your subset is neutral to balance. Equality: a proposition which states that two constants are equal. Equalities may be true or false. We have l believe an unequal model. True gentlemen prefer Kate Moss, balanced reality.

  • Comment number 60.

    Unrelated to my previous #59. Regulation, transparency and controls. Enforcement. The issue of private and commercial secrecy. It must be made an issue of top concern and resolved in favour of open disclosure.
    Snippet -,1518,539068,00.html

  • Comment number 61.

    I cannot remember when a politician last fixed something here in the UK and don't hold much hope for the present situation.

    Foreign policy is used to make them look active when they are achieving nothing at home.

  • Comment number 62.

    Here ya go, you know this industries numbers matter. Eat IT growth, its a fantasy.
    Worldwide chip sales are expected to be $219.7 billion this year, down from $248.6 billion in 2008. But sales are forecast to grow 10.2 percent in 2010 and by another 8.4 percent to $262.3 billion in 2011, according to the Semiconductor Industry Association. In June, the SIA expected chip sales to fall 21 percent. But the industry has been improving every month as the recession isn’t as severe as previously thought. By comparison, market researcher Gartner believes chip sales will fall 17 percent in 2009 and rise 10 percent in 2010, while market researcher iSuppli believes sales will drop 16.5 percent in 2009.

  • Comment number 63.

  • Comment number 64.

    Question: Is Britain growing yet?
    Answer: Yes. It's growing in frustration, stress, debt ... but not 'economic' well-being!

    The latter is arguably old news (GDP R.I.P.), as is the problem with debt, but the growth (and impact) in frustration & stress is only just starting to be reported*. The nation will soon be hit by a deluge of law suits from front-line workers - targeting traditional enterprises and poor leaders/managers (for a failure in their duty of care, under the Health & Safety at work act), for all the work induced stress systematically generated by leaders/managers as a result of them using out-of-date / flawed management practices ... nb a 20th century manager sends their people on stress management courses (to help them to 'process stress', and to reduce the risk of being sued) ... but a 21st century manager focuses on 'systematically removing the causes of stress'!

    Take a look at this ... for instance.

    Government officials, the CBI and insurance companies are quietly very worried about this, and so they should be. If you think recovery is not far away, think again. This crisis has not yet started! The failure created by out-dated/flawed leadership & management practice has only just begun, and such failures will divert yet more cash away from creating 'economic well-being', and away from delivering essential public services.



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