The incredible economy

The figures on the UK economy are becoming ever more incredible. Unemployment fell by another 46,000 yesterday, for the fourth successive month. A million private sector jobs have been created since 2010 (double the number of government job cuts). And yet economic growth has been plunging for nine moths now – by 0.7% in the most recent quarter alone.

There appear to be only two possible explanations. Either productivity is collapsing (i.e. all those workers are producing less per hour), which seems odd give the shift from public to private sector.

Or the numbers are dodgy and we’re not really in recession at all.

I feel a bit sorry for Osborne, and indeed for Darling. Labour lost the election partly on the back of ONS figures that had the country in recession in 2009 – which has recently been revised to show that the economy was in fact growing back then. Bit late, really.

Here’s my article in today’s Scotsman on this subject.

About these ads
This entry was posted in UK and tagged , , , . Bookmark the permalink.

4 Responses to The incredible economy

  1. countduff says:

    Good Scotsman article Tom, but I don’t find it so puzzling. Isn’t there a wider context? We know that since 2008 we’ve merely swapped the heroin of private debt for the methadone of public debt (which is a problem in itself) but the problem’s longer term than that. Isn’t globalisation, a policy pursued by western powers who rightly saw the benefits of free trade, edging towards its logical conclusion? Jon Moynihan hit the nail on the head in a recent article in The Times, where he mentioned “two numbers: $135 and $12. The first is what the average worker in the West earns per day; the second what the average worker in urban China earns.” These numbers have to get closer, and that can’t happen only by China’s (or the rest of Asia’s) urban population getting rich. Something has to give at the other end too. It’s (global) free trade in action, isn’t it?

    Meanwhile in Britain we still refuse to kick the methadone and go cold turkey. The politicians are neither willing to tell this simple truth, nor (quite understandably given the head-in-the-sand British public) able to implement the radical reforms that would change things quickly. We’ve tricked ourselves for a couple of decades – now we’re in for at least two more decades of long, slow, painful decline. It will be harsh, but fair. And I’m usually an optimist! Would welcome your thoughts…

  2. countduff says:

    Good Scotsman article Tom, but I don’t find it so puzzling. Isn’t there a wider context? We know that since 2008 we’ve merely swapped the heroin of private debt for the methadone of public debt (which is a problem in itself) but the problem’s longer term than that. Isn’t globalisation, a policy pursued by western powers who rightly saw the benefits of free trade is edging towards its logical conclusion? Jon Moynihan hit the nail on the head in a recent article in The Times, where he mentioned “two numbers: $135 and $12. The first is what the average worker in the West earns per day; the second what the average worker in urban China earns.” These numbers have to get closer, and that can’t happen only by China’s (or the rest of Asia’s) urban population getting rich. Something has to give at the other end too. It’s (global) free trade in action, isn’t it?

    Meanwhile in Britain we still refuse to kick the methadone and go cold turkey. The politicians are neither willing to tell this simple truth, nor (quite understandably given the head-in-the-sand British public) able to implement the radical reforms that would change things quickly. We’ve tricked ourselves for a couple of decades – now we’re in for at least two more decades of long, slow, painful decline. It will be harsh, but fair. And I’m usually an optimist! Would welcome your thoughts…

    • tdpcm says:

      Yes!

      Of course, the rise of China, India etc is fantastic news becasue millions of people are escaping poverty. There is also, from a global point of view, enormously greater scope for productivity improvements, which should help everyone, not least by creating extra demand. An optimist would hope that China et al can catch up while the West is still inching forward.

      As for debt, it’s inconceivale that democratric politicians will suceed in paying it all off. That’s why they’re in effect defaulting by inflating at away. Imagine, as an oriental investor, you bought British government debt five years ago. How much is it worth now>

  3. adam says:

    The situation with the UK economy today reminds me of the lessons learned from the BMI 737 crash at Kegworth some 20 years ago. Approaching the airport the plane suffered an engine failure. The pilots misread the data and shut down the good engine. The plane crashed. The UK economy is in a similar situation. If the ONS presents the wrong data, and the BOE (mis)interpret it to continue a policy of QE and low interest rates, then the UK economy is in the same position as that fateful 737 shortly before it came down on the M6.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s