Quick GDP Thoughts
Today’s GDP figures were certainly better than expected, with growth of +0.3% topping the estimates of most economists. But noting that something was better than expected does not mean it qualifies as ‘good news’.
The fact that avoiding an unprecedented ‘triple dip’ is celebrated as a sign of success suggests that expectations really are on the floor. This is like coming last in a race and announcing ‘well, at least I didn’t fall over and break my leg’.
Growth of +0.3% takes the economy back to where it was 6 months ago, before the fall in Q4 2012. We have had no growth in the past 6 months, only 0.4% growth in the past 18 months and just 1.8% in the 11 quarters since George Osborne’s first Budget.
Since the Government took office, the manufacturing sector has contracted by 0.3%, construction output is down a huge 9.7% and the service sector has grown by 3.6%. There are no signs of the much hoped for ‘rebalancing’.
The recovery is also much, much weaker than the OBR originally expected. The original estimate for 2013 growth was 2.9%. Even after today’s figures we’ll be extremely lucky to get even half of that.
And for all the talk of a ‘global race’ – our growth compares very poorly to other large economies.
Whether measured by historical experience, expectations or international comparisons the UK’s recent economy performance has been abysmal.