Coffee House

GDP relief leaves spotlight on a Labour party under pressure

25 April 2013

9:57 AM

25 April 2013

9:57 AM

Westminster has felt rather muted over the past few weeks: it may well continue to do so today, but for good reasons. That the first estimate of Q1 GDP figures recorded growth of 0.3 per cent means Labour spinners have to work much harder on falls in certain sectors in order to get their points across, and that George Osborne and David Cameron can relax, knowing they’ve just been gifted more good feeling in their party until at least the local elections. After the building tension over today’s figures came a really rather good anti-climax.

This means that the spotlight remains on Labour, and not the Conservative party. Len McCluskey’s intervention yesterday – slapped down by Ed Miliband as ‘reprehensible’ – is just one of a number of cracks appearing in the party’s unity. That the Coalition has avoided the triple-dip means Labour now comes under pressure to find a new strategy which isn’t merely predicated on things going badly for the government. They did last year, with a bad budget, bad economic figures, and many, many U-turns. And Labour naturally milked that. But now the party needs to decide how to attack the government in a more sophisticated way, while resolving its own growing rifts over key policy areas.

Of course, as we’re always reminding Coffee Housers, the first estimate of GDP is more important politically than it is as a totally reliable snapshot of the economy. Revisions of these figures may produce a very different picture. And in political terms, what Downing Street strategists worry is that voters will cast their vote based on stagnating living standards, not the latest ONS announcement.

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  • HookesLaw

    The change in GDP in the last quarter of 2011 was recently revised from minus 0.4% to minus 0.1%.

    Its likely that the ‘double dip’ will be revised out of existence. The official figure for the quarter after that – the first three months of 2012 – is also now minus 0.1%. And that is a rounding up of the actual figure, which shows output falling by just 0.07%. So, an upward revision of less than 0.05% of that first quarter figure would be enough to eliminate last year’s recession.

    PS
    can we assume the Spectator will amend its graphs?

  • CHRISTOPHER WHITE

    political leaders can be conflicted by wishes of constituencies e.g. TUs & views of voters

  • Daniel Maris

    So annualised, that’s 1.2%, if it can be sustained.

    Meanwhile, thanks to current and previous mass immigration, the population is growing by something like 500,000 per annum or about 0.8%.

    So annualised growth would be about 0.4% in per capita GDP growth.

    Then, when you look at how much money has been spent on borrowing and QE to get that measly 0.4%, the mind boggles.

    • HookesLaw

      Who is saying this is brilliant? The economy has had a heart attack and is recuperating. the worry we face is the Eurozone is hardly performing either. A great mass of sovereign debt is hanging over the world and the USA is facing a severe round of cuts as well.

    • Makroon

      Your mind is always in boggling mode old chap.

  • Mr Creosote

    Construction appears to continue it’s inexorable decline, but this runs counter to my local experience, where many new projects seem to have started in the last few months. The log-jam that is the planning system is slowly freeing up – a summer recovery is just around the corner.

    • Makroon

      Lots of small scale construction going on (see David Smith’s famous ‘skip count’).
      Much of it ‘on the black’.

      • Mr Creosote

        “On the black” is usually where it starts, once things start rolling they can wean themselves off the state assistance!

    • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

      So where are you ?

      • Mr Creosote

        Warks/Worcs

  • alabenn

    The new BBC line is now the building trade has been in recession since 2008, they seem to have forgotten Labour were in till 2010.

    No figures no matter how good will satisfy anyone from the BBC or the Labour party, they are scum who would rather see the country collapse than that anything should get in the way of their return to power.

    • HookesLaw

      You do a grave disservice to scum. Scum at least rises to the top.

    • Daniel Maris

      I don’t think that’s true. They are happy to trumpet the alleged fall in figures for violence. If the Tories were scoring say 2.5% growth, then I think they would be saying the outlook is reasonably rosy.

      The fact is that with population growth of 0.8% annualised growth of 0.4% is pathetic, when consumer confidence is still crumbling. The 0.4% growth is a product of debt-financedgovernment spending not real economic growth in my view. Ask yourself why the government is having to let the debt rise and rise and keeps revising its pay-off plan.

      • HookesLaw

        As the population grows not all the increase is engaged in the economy so growth in population should not necessarily bring an increase in GDP.
        But to take your argument at face value then under Labour we had economic migrants increasing the population and thus the GDP. This means that in real terms Labour’s GDP increase was a false one.

        As I understand it many Poles etc returned home so economic migrants declined and so the GDP might well be expected to be adversely affected by that.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          Weak. Really weak. Must try harder !

      • DWWolds

        Surely one of the reasons the debt is rising is the accrual factor of the £160bn deficit left behind by Labour.

        • HookesLaw

          And the immediate year after which could hardly be cut instantly. These sums attract debt interest. Labours increase in spending was structural and could not be covered by the economy’s ability to pay.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        It is very expensive this “growth”. A budget deficit of £120 billion annually plus QE and scalping savers cannot get any real movement and Velocity of Circulation is collapsing. So any reduction in the Deficit will cause growth to collapse

  • HookesLaw

    ‘sophisticated’ ? now there is a laugh.

  • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

    Westminster is an irrelevance, a real Jurassic Park

  • Fat Bloke on Tour

    IH

    The tone of your article just confirms how bad things really are.

    You and all the other dog boilers are getting all hot and bothered / moist over the fact that we have missed out on a triple dip recession …

    Yes that is right we have missed out on unprecedented triple dip recession.
    Absolutely nothing to boast about but boast you and they will.

    35 wasted months.
    Slowest “recovery” in history.
    Sniffy has got the plebs scared fartless so demand has gone south.
    The corporates ain’t spending because there is no demand.

    Remember AD / GB got the recovery going.
    The dog boilers have totally mucked this up.

    What will happen when the next tranche of cuts / dog boiling starts in Q2?

    • HookesLaw

      Cobblers, all Brown and Darling did was fuel a pre election boom under the guise of temporary ‘brought forward’ stimulus. ‘Brought forward’ meaning a gap in spending behind it which they did not care about.

      All you talk just shows you to be a pathetic propagandist.

      • Makroon

        It was a classic ‘dead cat bounce’ – all the panic destocking and “put on hold” work, unwound a bit. That’s all. there is always a dead cat bounce after a ginormous recession. and boy, was Labour’s famous recession ginormous. (take your moggie upstairs and try it !) (or, on second thoughts, take fat bloke’s moggie upstairs).

        • HookesLaw

          Well my moggie’s is not dead so it would land on all fours. But your point is well made.
          In terms of the car industry a new range of MINIs are coming which should sell like hot cakes abroad and inn Sunderland a new good looking Qashqai is due which again should sell like nobody’s business abroad and they are also producing a good luxury model.

          Its this kind of ‘investment’ the UK needs, not Labour’s ‘jobs for doing nothing’ subsidy pseudo-investment.

          • Fat Bloke on Tour

            Ba-Hooky

            Just where are Mini adding their extra capacity?

            They started with Austria.
            Now they are moving to Holland.

            Regarding Nissan it is the product of TB / GB / PM’s effort during the naughties.

            Maggie got a screwdriver plant.
            They turned it into a real plant with proper PD / Design.

    • Barakzai

      ‘Remember AD / GB got the recovery going.’ Yes, I remember the fruitful outcome of the close cooperation between No 10 and No 11 with these two stellar policymakers. And there’ll be more harmony and electoral appeal in your party just as soon as Unite installs the Ms Diane in the shadow cabinet.

    • Russell

      And what deficit did Brown/Darling leave behind in 2010? Anyone can get recovery going for a few months by borrowing disgracefully.

    • jimmy mac

      We had the longest, deepest recession of any major economy, along with the biggest deficit, under your Red Boys. I wouldn’t get on to the subject of records…

    • Fergus Pickering

      Whre did you disappear to, felller? Explain that dog-boiling thing again. I’m sure it’s very witty,

  • Mynydd

    Why should these figures put pressure on Labour, they are not the government, they are not running the economy, they are not responsible for the loss of our AAA rating, they are not responsible for the IMF comments. Another great achievement of the week, the deficit has come down from £120.9bn to £120.6bn, at this rate it will take 200 years to balance the books not the 5 years Mr Cameron/Osborne promised

    • HookesLaw

      The labour party are wholly responsible for the crippled economy they left behind and including the 160 billion deficit.

      • Mynydd

        For the 3 years 2007,2008,2009 the Labour government had a total deficit of £216.4bn. For the 3 years 2011,2012,2013 the present government has had a total deficit of £314bn. I have left out 2010 (148bn) because it was shared by both parties. From these figures it can be seen that the deficit and debt wise the economy was in a better shape then than now.

        • Makroon

          Ha-ha, top bombing/spinning !
          Worthy of the Master himself – Mr Gordon ‘tractor statistics’ Brown.

          • Mynydd

            I don’t need to spin these are real figures, look them up.

        • HookesLaw

          What cobblers. Stupendous ignorance.
          First the 2010 deficit is not shared by the govt it was inherited by the govt and is all Labours.

          Labour left an economy where 7% had been wiped off its productive capacity. large sectors of the banking industry which had been generating what turned out to be structural revenues, not cyclical ones, was gone.
          Such revenues cannot be replaced overnight.
          Brown in his ignorance thought these revenues were there for all time and left a massive deficit of 160 billion.
          Between 2001 and 2008 (before the crash) the debt went up from 3

          • Mynydd

            OK I’ll add 2010 deficit to Labour taking the 4 years 2007/2008/2009/2010 to £364.4bn, for comparison I’ll also add the projected deficit for next year, £120bn, to the government’s giving a 4 year total of £434bn
            I quote “Such revenues cannot be replaced overnight” but Mr Cameron/Osborne said in 2010 they could, we will clear the deficit by 2015. In terms of the UK economy that’s overnight.

            • HookesLaw

              Did they?
              There is a structural deficit to be cut, they said over 5 years and now they say over 6.
              You ignore the massive over spending by labour you ignore the loss of economic capacity under labour and you ignore the loss of banking revenues which labour milked.
              You ignore labour adding over 200 billion to the debt when we had growth.
              The comparison you are trying to make is fatuous. Vast amounts of Labours increased spending could not and never can be covered by the ability of the economy to pay for it.

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            They were fake revenues and fake profits

    • Magnolia

      Labour would borrow and spend even more with the result that the books wouldn’t be balanced for a thousand years. Either that or they’ll just cancel the debt with catastrophic consequences for every GB£ owner in the world.

      • Mynydd

        Do you not understand that Mr Cameron/Osborne borrowed £120,000,000,000 last year, will borrow £120,000,000,000 this year and, will borrow at least £120,000,000,000 next year. This means the present government’s borrowing and spending is out of control, so much so, that they will add to the National Debt more in 5 years than Mr Blair/Brown added in 13 years.

        • HookesLaw

          Its laughable that you claim spending is ‘out of control. Thats because labour left behind a mass of unaffordable spending, a ‘structural deficit’ if we have to spell it out for you, and a shattered economy and banks incapable of lending. We also have our export markets in recession as well.
          Complaining about a massive structural deficit left by labour and at the same time complaining about cuts in spending is not a very bright stance to take.

          But clearly you are not very bright as you have no comprehension of the problem.

          • Mynydd

            Do you accept, as Mr Cameron/Osborne have, last year and this year the government will overspend by £240bn. Now tell me, how much of this £240bn is a structural deficit. Do you accept, as Mr Cameron/Osborne have, this government will add to the National Debt more in 5 years than Mr Blair/Brown added in 13 years. Now tell me does the National Debt include debt due to structural deficit, or not. By the way before the worldwide banking crisis Mr Blair/Brown reduced the deficit as a percentage of GDP from over 40% to about 35%

        • Magnolia

          I know the debt is going up.
          Here at Coffee House we are very clear on the difference between the deficit (anual overspend) and the cumulative debt (what we owe on the credit card). We have also had many interesting discussions about the actual nature of ‘borrowing’.
          Labour always run out of other people’s money because they don’t really recognise the concept of personal wealth. They spend for the ‘collective good’.
          There is always another rich man/woman to tax.
          Here at Coffee House and over at the Daily T we have also had many interesting discussions about the slow nature of deficit reduction under this Conservative led coalition government.
          There’s even been a coarse Tory slogan to describe the nature of the cuts required in order to save us….Deeper, Faster, Harder…(cough).
          Now it doesn’t take much to realise that the debts are going to be bad at the time nearest to the bust (under Mr Brown) and that those debts are going to be particularly nasty to rectify when the whole world goes in to an economic funk at the same time as has happened. Perhaps we will leave the interesting discussion about the untoward dangers of globalisation for another day.

          • Mynydd

            Tell me about personal wealth, It is this government policy to hold interest rate down at 0.5%, which means my lifelong savings are returning under 2% when inflation has been up to 5%. So every year this government has been in power my personal wealth has gone down.
            With respect to the slow nature of deficit reduction, as I have said at the present rate it will take 200 years not the 5 as promised.

            • Magnolia

              I agree, they are bailing out the borrowers and I suppose they have made the judgement that that is more important for the economy at this time than to maintain the value of the savings of (mainly) older people. Those with savings do have choices about how they save and they would be advised to think very carefully about that. The aim is to preserve wealth rather than to lose it. The country really needs sound money.

  • Big Harry

    Word on the wire is that in Labour HQ this morning the great and the good thinkers of the left seeking to once again rule Britain were chanting “Triple Dip Triple Dip” as they waited for the report to be released.

    • Mr Creosote

      Ha….along with most of the BBC!

  • http://www.facebook.com/temple.melville Temple Melville

    If you recall, quite a few weeks ago, Mervyn King said the recovery was taking hold. He just might have been right…

  • John Aherne

    That opening comment must have been prepared before the preliminary figures were released! 0.3% wow, a figure lost in the margin of error. And the rest of the comments, built on a flat line GDP in all probability, are wishful thinking.

  • http://www.facebook.com/manners.mcdade.3 Manners Mcdade

    Ed Miliband is simply not up to the job. Like Gordon Brown he is not comfortable in his own skin and has an air of awkwardness about him which means the public will never elect him as their leader, regardless of their distaste for the Eton mob.

    • tele_machus

      Miliband is babysitting for the Charismatic one

      Post election there will be a coup by the triumvirate(Balls-Yvette-Andy)

      The actual election result is not in doubt

      • Nicholas chuzzlewit

        Yes a Tory win. We can then sit back and watch those three scumbags fighting like ferrets in a sack.

  • Colin

    All Idiotband needs now is for some speccy tw*t in a Donkey jacket to pop up..

  • http://twitter.com/Shinsei1967 Nick Reid

    “Revisions of these figures may produce a very different picture.”

    Indeed. There’s every possibility the last year or so may be revised up and so we not only don’t have a triple-dip but the double dip may get revised away.

    The fact that construction has been the major negative for GDP for the last year allows the potential for a big rebound. Unlike services construction is economic activity that is postponed. Miss out on an evening meal and that is expenditure lost, delaying the mending of a road is just that, a delay. With the weather improving from the snows of the winter and better mortgage numbers construction could bounce sharply regardless of any increased government investment spending.

    Plus there’s the confidence factor.

    Anyway, that’s the positive spin.

    • Gareth

      “There’s every possibility the last year or so may be revised up and so we not only don’t have a triple-dip but the double dip may get revised away.”

      Actually, there’s a 50% probability that the figures will be revised upwards, and a 50% probability they’ll be revised down. The Chief Economist at the ONS was clear this morning that there’s no evidence of bias in the early estimates. Subsequent revisions are equally likely to show a worse performance than one which is better.

      This is not the say that economic growth may improve over time, if deferred construction projects begin to happen. But this is not the same as revisions to the GDP estimates, which will always relate to the Jan-Mar 2013 quarter, even if they are changed later.

      • http://twitter.com/Shinsei1967 Nick Reid

        I believe that over the last 15 years the majority of revisions to GDP have been up rather than down. I’d quote figures but don’t have them to hand, but they were tweeted by a “reliable” source.

        But yes could easily be revised down. I said “could easily be revised up” because there is certainly plenty of disbelief in some quarters (nit all of course) that an economy that has created 750,000 or so private sector jobs over the last year is probably not flat lining.

        • Gareth

          Yes, but there is a distinction to be drawn. Those who believe that employment figures reveal an economy which is actually thriving are implying that the GDP figures are performing poorly in measuring the size of the economy. Growth figures have widely been held for many years to be a reliable indicator of the activity of the economy. I have not heard any arguments advanced as to why current GDP statistics should be inherently less accurate than in previous years.

          By contrast, those who question employment figures are not claiming they are inaccurate as measure, but highlighting phenomena which, definitionally, they do not measure. Examples would be transfers of jobs from the public to private sector, as well as the degree of underemployment. This view is backed up by labour market data showing a record number of people in employment who would like to work more hours than they are able to. Similarly, unemployment statistics definitionally excluded people registered on the Work Programme.

          • HookesLaw

            It may be that some areas of economic activity are not being recorded. The banking sector was contributing a relatively excessive amount before the crash and was easy to count. Who knows if the work which has replaced it is being counted?
            What has become clear about the UK economy is that it is not generating the tax revenues which its activity might be expected to warrant.
            We have seen the BBC conniving with its ‘talent’ to avoid tax and we have seen how in the labour years many large companies have been avoiding tax.

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom
          • http://twitter.com/Shinsei1967 Nick Reid

            The large number of start ups (whether recent grads who can’t get a “proper” job or redundant 40 year old bankers with plenty of cash) are a relatively new phenomena and may not be being picked up by the ONS.

            • Gareth

              True, but they may also be the sorts of “jobs created by the private sector” which aren’t necessarily delivering any significant earnings.

              In fairness, I am partially persuaded by a few of the responses people have given, but I suspect that the reality is still somewhere between the two poles.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom
        • Gareth

          So, a month on, the ONS confirms that its initial estimate of Q1 GDP growth has not been rounded up.

  • toco10

    The two Eds,the entire Labour party and the tax avoiding BBC news hacks,particularly most of those on the Today programme, must be devastated.Good news for the UK but not for the leftist elite.

    • Russell

      Even Sky news were interviewing manufacturers prompting them for bad expectations, only to get upbeat reports and feel good factors.
      It is expected from the rotten to the core BBC, but even Sky is infected with anti government propagandists.

      • http://owsblog.blogspot.com Span Ows

        this is what is never reported, ask any accountant and I bet they will say most of their company clients are growing happily and looking to expand/take on staff.

        • Daniel Maris

          Are you on major stimulants? Where’s the evidence?

          • http://owsblog.blogspot.com Span Ows

            The answer was in my comment: go and find an account/accountancy firm that deals with SME

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          I certainly hope so. I expect to see a trade surplus

      • DWWolds

        Have you only just realised that about Sky?

        • http://owsblog.blogspot.com Span Ows

          I think they do it intentionally to be seen as ‘not so different’ to the BBC; I think the fear of being seen as a UK Fox News is what drives it. I’d prefer a UK Fox News!

      • HookesLaw

        SKY are a bunch of juveniles as well. lets face it so is the whole media.

      • alabenn

        Sky news is now a travesty, its presenters and reporters are using Sky as a BBC job interview.

        • Makroon

          And the Sunday Times has now seen fit to give a contract to Adam Boulton, that Sky lightweight Labour luvvie, with nothing at all to say.
          His column is yet another content-free, trivia zone. Shame on you Martin Ivens.

          • HookesLaw

            Well he thinks Alistair Campbell is a bar steward, thats something.

            • Makroon

              Weren’t they fighting over some Labour princess at the time ?
              They deserve each other … and the princess.

          • DWWolds

            I’ve stopped reading the main columns – except for Dominic Lawson and Minette Maron – in the Sunday Times since Martin Ivens took over as editor. The revamp simply has not worked.

            • Makroon

              David Smith was an island of lucidity, but seems even he has now been nobbled.

          • alabenn

            Exactly, which is why I have cancelled my subscription to the Times.
            When the Open golf is finished I will do the same for Sky as it competes with the BBC for the most biased weak minded drivel since Comical Aly in Baghdad.

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            Sunday Times = Murdoch Sky = Murdoch. What are you trying to say ?

  • BigAl

    £8Milion plus reasons not to vote Labour at the next election. The Unions are back and pretending to ‘run’ the country with puppet Milliband.

    A bit of deja vous? Those who missed Thatchers interventions and the reasons for it are about to get a reprise as Labour are taken over by the Unions and left wing divisive policies are the result.

    All hard working successful people, hang onto your cash – 98% tax rates on the way.

    • http://twitter.com/Shinsei1967 Nick Reid

      To be fair the “puppet” Milliband did call these unions “disreputable”.

      • DWWolds

        But if he did not realise the unions would want a payback for their annual £8m he is naive beyond belief.

      • Makroon

        I think he was referring to McCluskey. McCluskey is a convenient aunt Sally to allow Red to prove his “stern with the unions” credentials. When it comes to Serwotka, Prentis or Blower, he adopts the correct servile attitude.

    • http://twitter.com/botzarelli AB

      Miliband knows that Labour relies on the Unions for money but also that doing what they want would be electoral suicide. Both he and the Unions also know that the Unions no longer have the power to bring the country grinding to a halt and that if they tried to do so it would be the end of both.

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