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, Economics editor 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 231.

    My econometic modelling supports the view of the IMF that the UK's GDP will grow by about 1% this year and 2% in 2014 and this will be among the highest growth rates in the EU albeit still low historically.

  • rate this

    Comment number 230.


    A zombie company is a bankrupt company and there are laws that prescribe the limited number of way to fix such a concern including killing it - in the way set out in law. I'd explain it to you in detail except I am prevented from doing so by the BBC's 400 ch. limit.

    It is an offence to continue to trade a company that has committed an act of bankruptcy this incurs personal risk.

  • rate this

    Comment number 229.

    Dear Stephanie, you present your 2 facts as:
    1. The figures might be revised up
    2. There might be growth next year,
    I suggest pigs might fly too? I suggest BBC replaces Stephanie with JOhn of Hendon, that is if he does not get Gideons job soon

  • rate this

    Comment number 228.

    I strongly suspect that Carney has not been told the truth about the UK banking system and its banks.

    He seems to be under the misapprehension that it is possible to solve the too-big-to-fail problem without collapsing the whole system - because the banks are bust and are all zombies.

    It he tries to fit the problem he will kill the banking system (or it would have already been fixed!)

  • rate this

    Comment number 227.


    Of course - but the BBC decided in its wisdom (NOT!) to limit everyone to 400 characters, unlike the vast majority of serious publications and media outlets.

    I warned them of the consequence of the twitterisation of discussions - abuse, trivialisation, half-truths as a substitute for wisdom and reason etc etc and even the eventual rise of extremism.

    But they made their choice!

  • rate this

    Comment number 226.

    surely the answer to all our economic woes from the start was for the government/BoE, rather than pump hundreds of billions into corrupt banks was to instead use ALL that money to give to UK taxpayers as a tax credit and let the banks fail. We would then be in a position where consumers had money to spend in the real economy and the bankers in the fake economy would be gone. NO TO SIMPLE

  • rate this

    Comment number 225.

    129 John from Hendon
    Don't you just long for those days when you could post a fully developed train of thought?

  • rate this

    Comment number 224.

    Re post 221. Of course GDP per capita would be a better measure. but 2 problems it rather assumes that you have a good idea of the number of population of the UK which thanks to the incompetent Home Office and Border agency we haven't actually got a clue.
    we can have a good guess that while population has risen significantly in the past 5 years GDP has fallen by nearly 4%= GDP per capita - 6% plus

  • rate this

    Comment number 223.

    "The incoming governor of the Bank of England says the next two years will be "decisive" for bank reform and warns central banks alone cannot eliminate economic risks"
    Bank reforms?
    Banks are the risk, they suck the life blood out of the economy leaving 'no disposable income'.

  • rate this

    Comment number 222.

    I was clinging to the hope that the new BoE governor would bring new thinking. However his Davos pronouncement is more of the same dressed up in jargon.

    More QE, more inflation above target (if we even keep a 2% target), more delay to serious banking reform and (probably) continued economic treading of water.

  • rate this

    Comment number 221.

    210 Andrew Taggart
    I suggest GDP per capita (PPP) is the best measure for international comparisons of the standard of living.

  • rate this

    Comment number 220.

    218 Charles Jurcich

    I am saying the country in not paying its way, this needs to be addressed first.

    Whilst a government can spend money that does not exist, there is no point in reflating the economy when not in surplus.

    I am saying we need to create exports, can't see the government doing that, and with assets values to high the UK is not competitive.

    Race to the bottom also no!

  • rate this

    Comment number 219.

    If I was a Hedge fund Manager I would bet they are WRONG......

    I bet there are a lot who already are....
    2013 = AAA rating gone = higher borrowing
    More QE = Higher inflation.
    Higher oil prices = Higher energy costs.
    deficit reduction missed = More Austerity

    all of the above = less disposable income = negative growth
    An IMF prediction is about a reliable a Nick Clegg keeping his word...

  • rate this

    Comment number 218.

    215 Happy,
    "this imbalance that needs to be addressed...cost of the state etc.."

    You seem to be implying that whenever the private sector spends or invests, it only ever benefits the UK, yet when govt spends or invests, it only benefits foreign countries. Why would public spending behave so differently to private spending.

  • rate this

    Comment number 217.

    The growth figures pre 08 were built on huge levels of personal and government debt and were artificially large. Saying that the economy is no bigger than it was when the Coalition came to power is meaningless. The deficit is the biggest challenge facing the Govt. and it is failing. There has been no austerity, just more mad spending. Gordon must be so proud of Osborne.

  • rate this

    Comment number 216.

    So we are to be comforted, for our house roof blowing off, the storm coming in, and all the chaos that ensued, because at least some of the neighbours haven't managed to fix their sheds yet.

    I suppose that might work in Yorkshire at any rate, Stephanie.

  • rate this

    Comment number 215.

    213 charles jurcich

    only trying to point out that it is necessary for a country to earn its keep and it is this imbalance that needs to be addressed. government spending and the cost of the state and non productive work along with lack of sound investment now means the state is mugging savers

  • rate this

    Comment number 214.

    Bit of advise for Osborn - when the horse is dead stop flogging it

  • rate this

    Comment number 213.

    212 Happy,
    "government deficit = surplus for china germany no help to the uk"

    That would only be the case if everything the govt spent its money on (without exception) was imported, along with its entire supply chain, and the entire workforce deliverying it to the govt.

  • rate this

    Comment number 212.

    166 kevinhaeding

    government deficit = surplus for china germany no help to the uk.

    debt and more debt is not the answer. but yes address income distribution.

    greece overspent was not a euro issue look at hungary instead


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