Coffee House

Good GDP figures heap pressure on Ed Balls as Tories relax

25 July 2013

10:43 AM

25 July 2013

10:43 AM

Naturally, today’s first estimate of Q2 GDP figures showing that the economy grew 0.6 per cent makes good news for the Conservatives. They can relax on their sun loungers (sorry, in their desk chairs in their constituencies as they work hard for local people) this summer knowing that though things are only getting better slowly, they are at least getting better.

GDP Growth, Change on previous quarter

For George Osborne, this is personal vindication of his private theory that things would start to turn around this summer. The Chancellor’s plan for this year had been to survive the Budget and hope for growth later in the year. He appears to have taken the right strategic course.

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The Tories are also aware of the notes of caution that always sound when these figures are released, not least that the ONS can revise them up or down as more data becomes available. They are dealing with the biggest cause for concern over these figures, which is that it matters more electorally whether voters feel that their lives are improving, regardless of what an ONS statistical release says. Today the response from Osborne and colleagues runs along the lines of ‘much done, economy slowly recovery, a long way to go’. CCHQ press office tweeted this line: ‘The British economy is on the mend – but there is still a long way to go and we know things are still tough for families’. Tory MPs are also quite keen to goad Ed Balls: good news on the economy is bad news for the shadow Chancellor.

Balls’ response underlines the living standards challenge for the government:

‘After three wasted and damaging years of flatlining, this economic growth is both welcome and long overdue. But families on middle and low incomes are still not seeing any recovery in their living standards. While millionaires have been given a huge tax cut, for everyone else life is getting harder with prices still rising much faster than wages.’

But his own challenge now, beyond saying ‘families don’t feel like they’re better off’, is to argue that somehow Labour would be presiding over a faster recovery. This is still the slowest recovery: not quite party time yet for the Tories. But can Balls convince voters that Labour would do a better job, or do his words only have resonance when the figures from the ONS bring bad news?

Cumulative change in GDP from pre-recession peak

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Show comments
  • AlexanderGalt

    What growth?

    A likely 1.5% this year with maybe 2.5% next.

    In 1934 in the Great Depression we grew 6.8%.

    There’s a great take on our next to useless coalition at the Ruthless Truth
    blog in: “George’s Bluff” at:

    http://john-moloney.blogspot.com/

  • david denton

    After three year of unadulterated negativity Mr Balls has painted himself into a very tight corner, where good news is a nightmare. But there are problems on the other side – Dave, having set his heart on winning another five years in coalition, now faces the prospect of having to govern alone. http://getwd50.blogspot.co.uk/2013/06/winning-ugly-with-clegg.html?view=flipcard

  • Fat Bloke on Tour

    IH

    When are you going to answer the questions …

    Why is the deficit not falling?
    What is the difference between the UK and the US regarding economic recovery?
    Why did Sniffy throw away the AD / GB recovery for political reasons?

    Please can you better?
    You give the impression that you write to order for ConDemNation.

    • telemackus

      My idiot friend and I are in complete agreement with you. Brown and the charismatic Ed Balls are the finest financial minds of the last 1000 years and both deserve the nobel prize for peas. I would nominate you also but do not know where you park your bike.

  • E Hart

    A middle aged person could probably get evens on dying before the economy recovers the ground it has lost. Keynes was right: “In the long term we are all dead.” It’s just a pity he forget to mention that before we reached that point we’d have been turned over by successive governments, lavishly regaled with ill-founded economic bullshit (which demonstrably doesn’t work), invited to enjoy all the virtues of an increasingly indentured labour system and the fruits of a blood-from-stone “trickle down effect” myth.

    A number of things: you don’t get any kind of economy by short-changing the middle class; stoking another housing bubble isn’t a good idea; sustaining high unemployment is an economic no-no in a developed economy; services do not an economy make; a rentier housing system removes a disproportionate amount of disposable income from would-be economic participants – and people who live on low wages, or wages below inflation, have less disposable income and are a drag on demand (unless you run a supermarket…).

    All in all it’s a fatuous shambles which you are encouraging us to view as a nominal/fledgling success. What possible grounds do you have for thinking this? Name ’em! Where is this vacuous service fantasyland economy going to take us? One look at any High Street ought to disavow you of your optimism – unless you run a bookies, Wonga, a cafe or a Turkish barbers. Wherever it is, we aren’t going to get there very quickly, oh, and when we do get there, we’ll have fuck all to spend and it might well resemble Upton Sinclair’s, The Jungle.

    All that and there’s the still the deficit and debt. Thank you for your insight. You might like to know that there isn’t a serious economist anywhere who would take solace from this performance. Not even even Rogoff & Reinhart now. If you tried reading any of them you might realise this. Most agree that Osborne’s policies have shaved 2% off GDP. Other than a retainer, what are you on?

    • the viceroy’s gin

      This is the best internet rant I’ve read in some time. Well done, sir.

    • HookesLaw

      ‘Most agree that Osborne’s policies have shaved 2% off GDP.’
      Cobblers.

      • E Hart

        Just do a bit of research. You know, read a bit and try and take it in. I know it’s difficult but cobblers is just saying ‘cobblers’. Wherever you look only the quacks think that Osborne’s strategy has any basis in fact. Most people in the know – those with serious economic credentials who’ve commented on it – think he is in the same predicament as Sisyphus but without the self-awareness.

        • HookesLaw

          Research yes? How does anybody prove what any growth figures might be if only their pet schemes had been followed? Cobblers.

          As this
          http://blogs.ft.com/money-supply/2012/09/07/the-uks-short-and-shallow-recession/
          says
          if you look at employment we had a short shallow recession.

          • E Hart

            There are too many to list. Check out the IMF, Simon Wren-Lewis, Joseph Stiglitz, Brad deLong, Mark Thoma, Larry Summers, Robert Reich, Robert Skidelsky, Martin Wolf and the rest of the ‘cobblers’.

  • Abhay

    0.6% quarterly growth and the glee that follows!!
    The risk of interest rate rise looms
    Housing bubble in the making too with UK’s own version of Freddie/Fannie

  • Tom Tom

    With 44% data points collected based on 44,000 forms sent out with a 30-50% response rate I feel distinctly underwhelmed. Then again it is a Kabuki Theatre and we are here to be entertained by the ship’s crew as we ignore the iceberg

  • the viceroy’s gin

    So the Cameroons are squealing with glee over 0.6% growth?

    A mean little bit of gruel served up, bought with massive deficit spending, bankrupting the future, and these muppets are crowing?

    And then what say about their massive QE, to inflate away wages and savings, and keep government interest payments low, to facilitate their massive spending binge, which mirrors Darling’s?

    I think the Cameroons better get ready for a bad show shortly. If you do what the Left would be doing, don’t be surprised if the electorate up and decides they want to put the other 1/2 of the Left in power, for grins and giggles if nothing else.

  • Daniel Maris

    As Fraser posted recently, GDP totals are not very relevant when you have a rising population. The issue is far more what is the GDP per capita.

    At the very least I think you should be shaving off a fifth for that GDP rise of 0.6%, so it is probably closer to 0.48%. A guy in the FT is arguing today that average household income would be a much more relevant guide to wealth changes. I couldn’t disagree with that either.

    Clearly this is changing the political landscape. But it won’t be entirely to the Tories’ benefit because there is a kind of primitive magic belief that only the Tories can deliver nasty medicine in bad times. If the times are becoming better they won’t be benefitting from that.

    • Abhay

      0.6% or 0.48%?
      Indeed the big issue of our times!

      • Daniel Maris

        It’s not so big now but it WAS (and remains) big when you look at our recovery (or not) from the recession – because it has been far slower than the graph above suggests (which in fairness was the point Fraser made).

        I would add that the 0.48 is really based purely on net migration. My own view is that the costs of infrastructure are so huge in our big cities that immigration has a far greater depressive effect on average household income than that would suggest – however that is much more a matter of interpretation.

  • Chris lancashire

    Good, solid progress by the Coalition Government in steadily recovering from Labour’s disaster. Equally, Osborne is right to be cautious as many external factors can affect the recovery.
    Balls’ whining and repetition of his class war lie does nothing to assist his cause or enhance his reputation.

    • kyalami

      The sweaty fathead, Balls, is getting his comeuppance and his words ring increasingly hollow.

      • Abhay

        Such is the superlative performance of the coalition??

        • kyalami

          Hardly superlative, but their starting point was an economy covered in manure.

    • Noa

      Good, solid progress?

      The UK borrowed £12.9 billion in June, as opposed to £11.9 billion in 2012. Thats about £300 million per day being added to the National Debt.

      http://www.ukpublicspending.co.uk/uk_national_debt_chart.html

      The creation, or re-inflation, of a debt bubble doesn’t provide a feel good factor for me. Nor does the Coalition’s spin that its doing well because, hey Red Ed would be doing even worse.

    • Abhay

      They made a big issue of country rating – lost that battle
      Borrowing out of control – check the figures
      Housing bubble in the making – thanks to a morally hazardous scheme
      and then 0.6% growth (Daniel Maris, our resident commenter-economist has pegged that at 0.48%)
      So what is ‘good solid progress’?

    • Mynydd

      If I read the graph correctly Labour left a growth rate of 1% a little better than 0.6% after 3 years in control

      • BullDancer

        What an economic illiterate you prove yourself to be. 0.6% for a quarter is 2.4% annualised, or 240% better than Brown’s debt fueled fake growth. If you want to troll on behalf of labour try and get your facts right.

        • Mynydd

          Using your method of calculating annual growth rate, the 1% left by Labour is 4% annualised. When I was at school 4% was greater than 2.4%.

          • BullDancer

            Are you saying labour left 4% growth? News to me and the rest of the sane world. Give up numpty.

            • Mynydd

              As I wrote, I used your method of annualising growth rate. Now if you don’t like the result, you should change your method. You took Q2 2013 @ 0.6% *4=2.4% I took Q2 2010 @ 1%*4=4%. Make of it what you like

              • Nicholas chuzzlewit

                Yes but adding the actual figures for 2010 does not come to 4% you imbecile.

          • Nicholas chuzzlewit

            1% was for the year you leftist idiot (but then I repeat myself) and was not growth in any event, simply the fading embers of a misguided debt fuelled boom.

            • Mynydd

              Read the graph Q2 2010 had 1% growth.

  • Mynydd

    I’ll believe in the recovery, even a slow recovery, when my instant access savings account pays more than the rate of inflation. Until then all the government talk, talk, and all the figures they produce, doesn’t stop me being robbed every month.

    • Nicholas chuzzlewit

      Then perhaps you should address your concerns to Gordon Brown whose megalomaniacal spending got us into this trouble in the first place.

      • Mynydd

        As I understand this government is more than happy to have the bank rate low at 0.5% and inflation above the 2% target which means the return on my savings is below the rate of inflation. The Bank of England has kept the rate at 0.5% to help the economy grow because the governments policies are not producing enough growth to allow them to raise the rate. Government policies have weaken the pound against, say the dollar, which makes imports more expensive, therefore higher inflation. For example, crude oil is priced in dollars coupled with a weak pound means I pay more at the pumps. It is down to this government, and this government alone, to manage the economy such that I and many other savers are not robbed every month.

        • HookesLaw

          Economic gibberish.

          • Wessex Man

            Now come on Hooky, is her gibberish any worst than yours?

            • HookesLaw

              Nobody’s gibberish is better than mine – I have GCE’s in gibberish.

          • Tom Tom

            You do post a lot of economic rubbish in contrast to the posting from Mynydd

        • telemackus

          Like my friends telemackus associates and the fatbloke we can all agree that the tories deliberately destroyed the fantastic economy left to them by Gordon, Ed and Liam. If only labour had not been cheated out of a well-deserved victory in 2010 we would not have cut so savagely and millions of poor people would not have died under this tory government and the IMF would have lent us all the money we needed, just like the 70s. Instead of annualised growth of 2.4% we would be enjoying an economy just like France or Greece and more people would be able to enjoy the good weather as we wouldn’t need so many jobs.

          • Mynydd

            You have to count the red bits as well

          • David B

            Idiot

            • HookesLaw

              No he is practising satire.

              • David B

                The legendary Tele whit, well half of it any way

        • realfish

          Hang on a minute. THIS Government?

          Who ran the economy in January 2009 when the £ fell to $1.3631 from a high of $2.0341 only a year earlier – a fall of 32.9%? – recovering only slightly to give a mean devaluation of around 25%

          Those (LABOUR) figures tell us quite a lot about our the seeds of fuel poverty, and about the lie that we were all in a ‘global crisis’. There might have been a crisis of sorts, but the markets recognised that the state of the UK economy, on Brown / Balls watch, was far, far worse than any of the other major economies. They reflected this accordingly.

          • BullDancer

            She’s telly’s thick sister.

        • Nicholas chuzzlewit

          Well thank you for the GCSe economics lesson. I simply cannot be bothered to expend any effort explaining to you how an integrated economy actually works.

          • Mynydd

            All I want is a reasonable return on my savings, maybe Mr Cameron/Osborne should start with a GCSE economics lesson and then go onto study how to manage an integrated economy, rather than robbing me every month.

            • BullDancer

              If you wanted a reasonable return you should have put your money in the Cyprus banks, but wait a minute, how did that turn out? Better Osborne than Balls who would have turned us into a Greece, Cyprus or, God forbid, France. You are quite a numpty aren’t you?

              • Mynydd

                No matter what Mr Balls does he cannot, and I repeat cannot, turn us into Greece, Cyprus or France because we are not in the Eurozone.

                • Nicholas chuzzlewit

                  I think he is saying that Balls would bankrupt the country regardless of currency you half-wit.

            • Nicholas chuzzlewit

              You are too stupid to have any money and clearly too ignorant to consider alternative investments if you did.

    • Abhay

      Yes to that.

  • Fat Bloke on Tour

    IH

    You are having a laugh.
    We are now only back to where we were in May 2010.

    38 wasted months.
    Sniffy strangled the growth left by AD / GB for political reasons.

    Deficit reduction = Stagnating.
    Compare and contrast with the US.

    Add in the situation with living standards and wages.
    Not looking good.

    • Nicholas chuzzlewit

      And after that fantasy we will return to “Watch with Mother”. You are tight about one thing, it is “Not looking good” for Ed Balls.

    • Alex

      I agree that we should learn from the US. But sadly it’ll take time to ramp up shale gas production.

      • Makroon

        I am not about to read Fatty’s drivel, but it is worth noting that latest estimates for the “strongly recovering” US, are for 2013 GDP growth of 1.7%. First half 2013 estimate for the UK, (for what it is worth), puts us at just over 1.8%.

        • HookesLaw

          Pure invention and drivel as ever from fatman. Starts from a false premise and builds on from there.

    • David B

      It took Brown 156 months to total destroy the economy, so fixing it in 38 months is a job well done

    • kyalami

      You seem blithely unaware of the extent to which Brown and Balls b*ggered the economy. Their damage will take a generation to put right: getting visible progress in 38 months is a reasonable accomplishment. Given the damage they inflicted on the UK economy, Brown and Balls should be facing treason charges.

    • telemackus

      I find lithium and electric shock therapy direct to the testicles helps me cope with a tory-led world. If you like I will give you the number of my guards so they can assist you as well.

      • David B

        Why are you replying to one of your own accounts

  • realfish

    ‘This is still the slowest recovery…’

    Why should that surprise anyone? Economists back in 2010 were telling us that such was the enormous depth of hole that Britain’s economy was in – unprecedented in modern times, it would take half a generation for us to recover; growth would be impeded for years by the size of our deficit and the compounded structural liabilities would see our debt rocket.

    Yes! Balls can fantasise that the recovery would have been faster under him (and the BBC will give him all of the air time he needs to do so), but is he really claiming that the ship that he and Gordon Brown drove on to the rocks could have steamed through the Euro crises, untroubled? It is far more likely that with he and Brown on the bridge, the ship would have gone down.

    • HookesLaw

      Indeed
      From 1992 to the end of 2008 we had uninterrupted growth. That’s what the statisticians tell us.
      Between 1992 and 2008 we added £359 billion to the national debt.
      Growth? Growth did not cut the debt. Growth did not give us surpluses. Governments spent too much, more than the economy could support. Nothing has happened over the years to change that and the public are unwilling to recognise the problem.

      The last thing we need is a return of a Labour govt which would inevitably return to its spendthrift ways.
      The spending taps are incredibly difficult to turn off though. There will be many years ahead where we must constrain spending, because at some point it might be nice to pay back a bit of our debt.

      Will he country let the govt do that? It’s far too easy to blame politicians when the easy come easy go habits of the public are at fault.

      • Mynydd

        How much has this government added to the national debt since 2010?

        • realfish

          A considerable amount, in line with the debt liabilities left by Labour (i.e. an unaffordable benefit structure, compounded debt interest etc etc etc)

          • HookesLaw

            Correct. Labour left an economy totally unable to sustain the spending levels it bequeathed.
            Typically lefties like Mynydd ignore the cautious approach to cutting spending adopted by the govt (preferring to follow Balls’ propaganda line) which involved backloading the cuts. The govt have in fact avoided the scorched earth policy they are accused of and done their best to support the economy and employment during a difficult 2 years for the world and european economies.

            The realities are that govt can do very little except control their own spending.The govt needs to cut its structural deficit.

    • telemachus associates

      Forget crowing
      Look at the photograph
      All these paltry figures emphasise is that the 3.6% that should have been is 3% short
      If the stupidity of Alexander and Osborne had not choked off capital investment on accession it would still be ~ 2% short
      In a short 22 months this current figure will help Ed get to the 4% that will be achieved by major investment in infrastructure
      Not only authorising HS2 and airport expansion stat but major schoolbuilding, hospital renewal and a proper home policy.
      We deserve better than todays crowing over paltry figures.

      • telemackus

        My friends at telemackus associates are quite correct. By cutting off the great Gordon Browns munificence and the charismatic Ed Balls financial planning, Osbourne condemned us to a recovery instead of the fantastic results of Greece, Spain, Portugal, Ireland, Italy and Cyprus which would have led to us being a member of the Euro. The tories will regret a measly annualised growth of 2.4% when under labour we could have had much cheaper sweets and higher taxes and welfare.

        • Mynydd

          Greece, Spain, Portugal, Ireland, Italy, and Cyprus are in the Eurozone therefore don’t have Mr Cameron/Osbourne’s magic money tree that can print money at will.

          • HookesLaw

            http://www.guardian.co.uk/business/2012/feb/28/european-central-bank-euro-eurozone

            ‘ECB to launch second wave of euro ‘quantitative easing’
            For second time in two months European Central Bank is to flood markets, with 1% three-year loans that may amount to €1tn’
            ‘Analysts speculate that the take-up of what amounts to a eurozone policy of quantitative easing could reach €1tn (£850bn) when the funds are made available, the expectation is that the borrowing will roughly equal the first round of
            lending in December when more than 500 EU banks netted €489bn.’

      • HookesLaw

        0.6 is for the Quarter. The notion that the quarterly figure should have been 3.6 is risible.
        Growth was not choked off. Labour brought spending forward as part of the plan to fuel a pre election boom. Bringing something forward leaves a gap behind.
        Sadly the stimulus (or electoral bribe) failed and there is nothing left but hard graft and to regain control of spending and cut out Labour waste.

        • Mynydd

          So why didn’t win an overall majority?

          • HookesLaw

            Brown? Why did he not do worse? because Darling spent a8 months propping the economy up with a mass of borrowing

  • stanedeid

    Hurrah! Another boost for England’s tory party.Another boost for the independence movement in Scotland.

  • rick hamilton

    I thought ‘flatlining’ was an allusion to those heart monitors in hospitals where when the line goes flat the patient is dead. The British economy is not dead, despite the best efforts of that hypocritical incompetent Ed Balls. It’s time for him to find another buzzword to flog to death. Meanwhile he might consider excluding MPs, top executives of the BBC and NHS, and any indeed other bureaucrat being paid more than the PM from the category of ‘everyone else’.

    • HookesLaw

      In fact in terms of employment this is the shallowest ever post war recession.
      Not a picture Mr Nelson wants to publish.
      http://blogs.ft.com/money-supply/2012/09/07/the-uks-short-and-shallow-recession/

      ‘The problem is that that the Niesr chart might be showing us irrelevant
      nonsense. It is also not a sufficient description of the UK’s recession.’
      ‘things are so abnormal that Niesr is doing the country a huge disservice in continuing to publish the Niesr chart alone’
      ‘Using the same scale as the Niesr chart, it shows that the current
      downturn is competing with the 1970s equivalent to be the shortest and
      shallowest recession in post-war UK economic history. It is especially
      relevant as employment matters more to most people than GDP.’

  • HookesLaw

    The only comparable recession is the 1930 one – where the economy had a totally different structure and it is most unfortunate for Osborne that we do not have a world war to rearm for.
    I speculating how a graph of people in work might compare as a comparison – especially if you take the armed forces out of the equation…

    • HJ777

      If you look at the figures, you will see that the UK economy recovered strongly from mid-1932 – well before re-armament.

      It is more true to say that the US economy (which performed far less well than the UK during most of the 1930s) benefitted from re-armament, not least from UK arms orders in the late 1930s.

      • HookesLaw

        And as I said the British economy was structured differently in the 30’s.
        Nelson wheels of his same old same old every time but never bothers to question why, or the fact that he might be comparing apples with oranges.

        • Wessex Man

          Well that’s the quickest bit of divert and confuse that you’ve done in a long time Hooky!

          How about HJ777 completely correctr point being answered?

          • HookesLaw

            There was a great hunger march in 1932 – so much for saying the recession had ended.
            For many with no debt and in work, the 30’s were great – falling prices lovely if you could get it.

            its always dangerous to be superficial but I do not see much difference then to now.
            Europe was a mess and we left left the gold standard and devalued the pound and cut the expenditure we could control (no NHS of course) and there was low interest rates and an increase in the money supply. More defence spending came in c1935.

            There was a big GDP bounce back which then fell back and then growth picked up again. A similar histogram to the one above.
            Mr Nelson is flogging his hobby horse to death. Some estimate put unemployment at its peak at 22%… we should be pleased that govt policy has avoided that.

        • Tom Tom

          and French orders. Hooky has watched too many US programmes and has
          little idea of the UK economy in the period after 1921. Take a look at
          the UK National Archives……..

          http://www.nationalarchives.gov.uk/cabinetpapers/themes/economic-policy-1920s.htm

          • HookesLaw

            How much debt was there in the 1930’s?
            Leaving aside the household debt then compared to now… The national debt in 1929 was £7.5 billion. In 1932 it was £7.4 billion.
            The economy was quite different.

            Public spending in 1932 was £1.4billion in 1929 it was 1.3 billion – so no matter how brilliant the recovery it was not down to a mass of government stimulus.

    • Tom Tom

      Trash. The 1920s Recession started long before 1930 after Bank Rate was
      raised in 1921. Stop watching US newsreels and start looking at the UK
      instead. The current Depression is very DISSIMILAR to the 1930s anyway
      because the DEBT Overhang is the problem not Underconsumption. There is
      however a Structural Problem just as in the interwar period – then it
      was overdependence of coal, cotton, and now it is overdependence on FIRE
      sector. The country could not pay for its imports after 1940 and
      required economic aid and foreign loans just as in 1915. in the 1920s
      and 1930s 40% Government Spending was Debt Payments and Defence did not
      exceed Debt Interest until Chamberlain took over in 1937

      • HookesLaw

        The 1920s were a period of high unemployment low growth and deflation. There was little in the way of a credit boom. And before 1931 the previous recession was 1919-21

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