Straws of hope from GDP


Anyone who still wants to be optimistic about the UK economy after today has two important facts to cling to.

The first is that these early estimates are likely to be revised - and at least some in the city think the revision is more likely to take the number up than down. Regular readers will be thrilled that our old friend, the construction sector, is in the frame again - the sharp fall in output in this sector in December is very much an estimate, which some consider a little fishy.

The second point of potential hope is that these numbers deal with the past. They do not necessarily tell us much about the future.

Taking away the one-off boost from the Olympics, the figures suggest that the UK economy was broadly flat in the second half of the year.

There have been mixed signals from the real economy in recent weeks, but few in the City are now predicting a dramatic downward lurch. The broad sense is of an economy that is treading water - not one that is about to drown.

A second consecutive quarter of falling output is possible - the much talked about triple dip. But as the Bank of England governor has pointed out recently, that is quite likely in an economy that is broadly flat.

The IMF expects Britain's national output to be 1% larger at the end of this year than at the start, and to grow by 2% in 2014.

Even that would barely take the country back to where it was at the start of 2008. But it is faster than any major economy across the Channel - the eurozone is collectively expected to shrink in 2013, with little or no growth even in 2014.

Stephanie Flanders Article written by Stephanie Flanders Stephanie Flanders Former economics editor

So it's goodbye from me

After 11 years at the BBC, I'm leaving for a new role in the City.

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  • rate this

    Comment number 31.

    blaming them for everything is wrong I know that I have had plenty of opportunities and made my mistakes and whatever barbs there are to fling you never know how things might have turned out otherwise I feel I'm still on square one with all those issues to tackle exactly as they were before. Maybe with the benefit of experience.

  • rate this

    Comment number 30.

    @22. Sanchez
    When labour came in they paid down the national debt, the Tories said that wasn't needed and we could have more.
    Are you seriously suggesting that the Tories would have been harder on the banks and city? Sounds like a parallel universe to me.
    We would be in a much worse place had not labour invested in the country.
    We have had investment that has worked for the country, Not anymore

  • rate this

    Comment number 29.

    I hope Stephanie is right to be optimistic. The biggest bubble in history, the Bond market, is going to pop. Sterling will devalue. We then get rampant inflation. Then we get higher interest rates. Then housing market crashes, etc etc. I think we should of just defaulted in 2008 and jailed the bankers & politicians responsible. The big reset approaching is now going to be much bigger & painful.

  • rate this

    Comment number 28.

    ime a lay p[erson ordinary joe/blogs but again we hear that the dyre and employment is down or is it up?? ive lost trhe plot..and to the figures well i think someone is playing with them foe advantage or am i nieve???? i dont make common sense (not i said))common sense as eco flat..i smell a rat as they say..thanks steffi..oh and mine is a pimms at davos plz..ile pay..toe

  • rate this

    Comment number 27.

    Anyone posting on here have a 0.5% mortgage, loan, business loan, overdraft?

    Thought not

    I repeat, the only low interest rates are the BoE base lending and what you get for your savings.

  • rate this

    Comment number 26.

    "Straws of hope from GDP"- more like clutching at straws!

  • rate this

    Comment number 25.

    As a physicist I don't have much faith in a small number - 0.3% that is published without a formal estimate of a one standard deviation error. The GDP number is made up of several inputs all with uncertainties. The track record is that the number gets revised upwards. If you did A-level lab experiments like this you'd get grade C. Maybe that's about right for the ONS?

  • rate this

    Comment number 24.


  • rate this

    Comment number 23.

    Here it is again for the Tory ostriches who still have their heads in the sand after all these years...

    Timeline: Credit crunch to downturn

    Lots of banks get mentioned (nothing done to correct them)
    Result? The economic disaster you are witnessing, enjoy!

    Blame Labour if it makes you feel better but, don't let facts get in your way.

  • rate this

    Comment number 22.

    "Every Labour govt economic disaster...- why do people vote for them?"

    If you live off benefits there is no reason not to vote Labour. Otherwise you would have to be a plain fool to vote for them. If they ever got back in power, Labour would again spend madly, then try and fail to tax the rich, then tax all hard-working people into oblivion, Its obvious.

  • rate this

    Comment number 21.

    I don't see much hope on the high street- just more and more businesses closing down. Osborne doesn't care. As long as he can decimate the state as much as possible. A recession just gives him an excuse to cut everything even more so he'll probably welcome a triple dip recession . He can then say we can't afford anything.

  • rate this

    Comment number 20.

    what a side splitting comment, i cannot stop laughing as your comment is from Aesop's fables
    you are so dyed in the wool tory that you cannot see what is going on around you
    You would support your beloved government even if they brought back hanging for those reaching 65
    For gods sake grow up

  • rate this

    Comment number 19.

    To repeat my previous point the sluice gates of 0.5% base rate has been jammed open the sewage has spilled everywhere your pensions your house the money in your wallet all tainted and devalued.

    The real economy depends on this rate more than a few spivs fixing the LIBOR . Now stop debating a recovery till these rates are >4-5% then you can measure how the economy is really doing.

  • rate this

    Comment number 18.

    Here's someone who actually knows what he's talking about.
    Max Keiser on The Daily Politics today.

  • rate this

    Comment number 17.

    Growth will stay flat. Incomes have been squeezed; esp. savers' & pensioners'. Banks don't want to lend; consumers don't want to borrow. We can go on for 25+ years like this. Merv calls it bumpy; I call it a national disgrace.

  • rate this

    Comment number 16.

    While the blinkered ideologists argue about who's fault it is (in reality I suspect both parties are too blame) their living standards are being eroded.

    What happened in the past sixty years can't be changed but it does have a chilling effect on us today and will do for generations to come.

    But even then we still live comfortable lives in comparison to our ancestors.

  • rate this

    Comment number 15.

    "No-one believes this any longer as they can see spin very easily nowadays."

    Actually, one of the very good things about this government is that uses spin very little. It is a welcome change from Labour's disastrous addiction to spin, which Miliband continues to live off. I do not believe one word Miliband ever says.

  • rate this

    Comment number 14.

    Now the 'coalition' have found the technique for getting the results they want, revision. Why don't they apply it to their deficit. They could then make the deficit vanish by 'revising' the figure!
    Lies, damned lies and statistics, great way to run an economy.

  • rate this

    Comment number 13.

    But isn't the analogy that a drowning person will clutch at straws....even though this has no hope of saving them??

    The fact we may be drowning more slowly than those trying tread water with bowling ball sized Euro weights in their pockets isn't really a cause for hope.

    Economics has been disappearing into an infinitely small space into which logic can no longer squeeze...keep the faith though!!

  • rate this

    Comment number 12.

    Osborne led us from recovery into the double dip recession. He is likely to lead us into a triple dip recession as he is continuing with the same policies that led us into the double dip or otherwise flat economy. Our economy could have been growing much better if Osborne hadn't cut so fast and hard. Osborne and Co's cuts are only going to get worse. Osborne only cares about cutting the state.


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