2011 Q2 Growth figures

Just for the record … it’s being announced that UK 2nd quarter growth is barely positive. One again, there are “special factors” that get in the way – a tsunami and a Royal Wedding, warm weather and Olympics tickets, ffs. These really are very, very poor excuses.

And these are preliminary figures. So there’s still time for that downward revision …

Still, it could be worse, according to our Chancellor. We could live in Greece.

“And it is positive news too that at a time of real international instability we are a safe haven in the storm.”

Watching the TV, it seems that this is our fault – we aren’t borrowing money to spend (even if we can find a bank to lend it). Possibly because those whose jobs aren’t being cut may well be offshored.

Or maybe because we’re saving up to let their kids go to College. Or to help out parents whose care funding has been cut. Or because their pensions are under threat, so they need to save more. And that’s assuming that you can afford food and energy.

Ultimately, the problem hasn’t changed. We’re not making enough. And we need people who have disposable income to buy things. That won’t happen if they’re worried about their jobs disappearing.

So there’s no Income Tax and VAT – both of which help reduce the deficit. So if Ozzie blindly carries on down this path, we’ll end up with even more cuts needed. At the end of the last set of figures, commentators were feeding the line : “if a Chancellor admits there’s a Plan B, then Plan A is dead”. Well, George, you’ve had three months to put together a Plan B. Or – if it’s more politically expedient – find ways to moderate the impact of Plan A.

Stephanie Flanders’ blog points out that we’re not doing as well as comparable countries.

This was, actually, so very foreseeable. I wrote about it in January, because it was so clearly rooted in dogma, rather than economics. It needs sorting out. And I think that means either a Chancellor who actually knows what he’s doing, or one who will listen to someone who does..

[Edit 13:34]

Ozzie apparently thinks this absolutely flat growth has the advantage of “stability” – unlike less stable Euro countries (such as Germany) which actually have growing economies. Unbelievable.

Economic growth (again …)

Our Chancellor now say that there will be “financial turmoil” if he has to ease off on tax rises and spending cuts.

Sorry, Ozzy, that’s a cop-out. If you’re saying you can’t backtrack because it’s too complicated, then you’re just incompetent.

Interestingly, the fact that this is being addressed at all suggests that he’s maybe starting to worry that his plans will go horribly, horribly wrong. The USA, for example, is focussing on growth (apparently successfully) – something which our government is just hoping might come good …

The suspicion of desperation is fuelled by his plan to persuade companies sitting on cash reserves to “start spending that money”.  Good luck with that. If I was running a business, I’d be hanging on to every penny at the moment – given that the banks aren’t likely to lend it out if I need some (I see you’re not expecting the banks to spend the cash any more – even though we own them).  I’d actually be looking to reduce my working capital at a time when demand is falling.

2010 Q4 Growth figures

Well, the UK economy shrank in the last 3 months of 2010.

Our PM says that

“the worst thing to do would be to ditch your plans on the basis of one quarter’s figures”

It’ll be interesting to see how many quarters’ figures it takes. Because if growth doesn’t happen, then we’re going to end up with even more cuts.

The Tories seem to have an inbuilt belief that we have to take our economic medicine – that the nation can’t recover without pain. This extends to a fallacy that the pain will result in recovery. Neither of these is actually true.

This attitude is a hangover from the Thatcher era, when British industry might have had a chance of surviving if interest rates hadn’t been raised at a ludicrously fast rate. Companies failed not because they weren’t viable, but because they didn’t have a chance to adapt to the new rules.

So now – as well as the deficit – we have negative growth and inflation moving to the “out of control” zone (something which won’t impress the Tory-voting pensioners). And – with the knock-on of the public sector job cuts – reduced income tax revenues.