From the TUC

GDP figures: What contribution has the private sector made?

23 Jul 2010, by in Economics

In response to today’s GDP figures the Chancellor has stated that:

Today’s figures show the private sector contributing all but 0.1% of the growth in the second quarter, and put beyond doubt that it was right to begin acting on the deficit now.

Is this correct? During Q2 the ONS estimate shows that the economy grew by 1.1 per cent. So, 0.1 per cent of this growth would be 0.0011 per cent. Has the private sector contributed all but 0.0011 per cent of growth? No – as page 5 of the ONS release shows, the contribution to growth made by different sectors of the economy is as follows: Production 0.1 (9 per cent of total growth); Construction 0.4 (36 per cent – much of which will be state supported); Distribution, hotels and restaurants 0.1 (9 per cent); Business service and finance 0.4 (36 per cent); Government and other 0.2 (18 per cent). In Transport, storage and communications growth was negative, leading to a loss of 0.1 (9 per cent).

So, ‘Government and other’ spending has contributed 18 per cent of total Q2 growth – and a significant proportion of construction spending will also be accounted for by public sector investment (these figures reflect the situtation in April). At best the Chancellor’s statement appears to deliberately underplay the impact that public investment is still having on the recovery.

5 Responses to GDP figures: What contribution has the private sector made?

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    Jul 23rd 2010, 10:35 am

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  2. Pabs
    Jul 23rd 2010, 11:23 am

    The Con-Lib is only interested in pushing their ideological approach to government regardless of economic or social data. Voters were lead to believe that the problem was with the financial industry and not with NHS and education.

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    Jul 23rd 2010, 12:48 pm

    […] the way, the new survey throws further light on the mystery of the Chancellor’s strange observations on the GDP data. George Osborne said that the private sector contributed all but 0.1 per cent of the growth and […]

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    Jul 23rd 2010, 4:41 pm

    […] estimates for GDP show that the economy grew by 1.1 per cent in the second quarter of 2010. As Nicola has pointed out, the sectors contributing to this total […]

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