Coffee House Specdata

ONS admits UK economic recovery is stronger than it thought

20 December 2013

20 December 2013

The ONS has today revised upwards its growth for most of 2013, to show a recovery far stronger than it admitted at the time. This fits a trend: in economics, good luck tends to come in waves. And the tools economists have to work out what’s happening are so crude (and often useless) that it takes years to work out what really happened. Only in 2011, for example, was it clear that Gordon Brown had incubated the worst economic overheating since the war – hence the crash. But by the time this was clear, everyone blamed bankers for the crash – when, in fact, it was just reckless economic management. Which all the economists, with their ‘output gap’ spreadsheets, missed.

Remember the triple dip? The above graph, from Citi (pdf), shows what nonsense that turned out to be. And how much better things look now (in black).

Subscribe from £1 per week


This has implications for George Osborne in 2014. The Treasury’s forecasts, now outsourced to the quasi-autonomous Office for Budget Responsibility, are more in line with the consensus rather than the optimistic outlook of the Bank of England (its comparison below). This suits Osborne politically: far better to stand up with better news than worse news. But each month, the BoE forecasts look that much more likely. This suggests that, when the Chancellor delivers his 2014 Budget, he’ll have more cash to play with.

Screen Shot 2013-12-20 at 12.49.03


More Spectator for less. Subscribe and receive 12 issues delivered for just £12, with full web and app access. Join us.

Show comments
  • Guest

    test

  • ohforheavensake
  • ohforheavensake

    Hi Fraser- have you looked at the UK GDP per capita? It’s a more reliable measure-

    http://www.tradingeconomics.com/united-kingdom/gdp-per-capita

    But the problem is, it doesn’t fit your preconceptions, does it?

    • Hello

      The IMF have economists too. They say that the UK economy was overheating. Quite substantially. But no, no — you’re right. Martin Wolf knows best, I’m sure.

      • Tom Tom

        IMF economists are no better than Martin Wolf, in fact they act in accordance with directions and the largest grouping inside the IMF is British

      • ohforheavensake

        GDP per capita is still 6.4% off its 2007 peak, if you or Fraser are interested.

        • Hello

          And what does that prove? Like I said, the economy was overheating, so the 2007 peak was too high. Also, in case you haven’t noticed, there was a recession. So, I ask again, what does that prove?

    • Tom Tom

      The UK economy used to have a growth constraint, >3% it would blow the trade deficit through the roof. Since the De-Industrialisation this effect takes place <3%………so growth would require high taxes on Consumption and Imports which would suggest much higher VAT and Income Tax back to a 35% Base as in the 1970s

    • tastemylogos

      OFHS indeed! In 2007, We had the biggest structural deficit in G7. Period.. Fact. Between 2000 and 2007 our balance of payments were at their greatest degree of deficit for 60 years, fact. from 2004, living standards began to fall for the first time since 1977, fact.

      Alas, as has become clear over reading much of your tripe. You are either a paid Labour activist or you are weirdly in love with Brown. Didn’t put a foot wrong did he? Either way, it is disconcerting.

  • Rockin Ron

    As we are approaching the season of goodwill and peace to all, I will refrain from saying what I really think about this ‘analysis’. However, it does seem to point to an artificial, QE inflated recovery manufactured for the 2015 General Election. After 2015, we will see the real so called ‘recovery’. Vote Ukip.

    • Tom Tom

      MIstranslation – the phrase is “Peace to Men of Goodwill” not “Goodwill to men” – someone made a mistake in the genitive and confused the true meaning that only the Chosen are selected

  • James Allen

    Worst import/export balance since 1989, highest annual deficit in G8, highest debt-to-GDP ratio since 1950s, slowest recovery in history, highest personal debt in the world, highest Govt spending as % of GDP since 1975/6, but the army at its smallest since the Crimean war….

    And Fraser talks about the Chancellor having “cash to play with”! Jesus H Christ!

    What the metropolitan elite fails to notice is that Britain is in an incredibly vulnerable position; it needs only for the global economy to suffer a minor downturn (or the Euro to implode) and the whole thing will unravel – in short order we’ll be run by fax from Washington or Beijing. The problem with the Labour party – and increasingly the Tories it seems – is that they are too fundamentally immature to run a grown-up country. We’re being run into the ground and not even the supposedly right-wing Spectator can see it. Instead we hear about Stella Creasy’s attempts to ban ‘genderised’ dolls, of all things.

    What hope do we have?!!

    • Tom Tom

      You are too rational. This is all about Partying to Oblivion and hyping things up for the election in May as a dry run for May 2015. Fraser has his instructions and has to stimulate party mood on this blog

    • tastemylogos

      Our balance of payments was worse in 2003. 6% then. 3.5% now.

      Eire has more personal debt than us now.

      But the rest is spot on!

      • James Allen

        I was quoting other sources. Typical; bad information. Thanks for the corrections!!

    • Makroon

      Yeah, we have already had, not a “minor global downturn” but a bloody huge one, and not the collapse of the Euro (which wouldn’t be so bad), but a Euro area slump with massive lingering uncertainty – which is the main reason why we are pulling in imports but exports are rising only slowly.
      UKIP’s continued talking down of the economy and country is both tiresome and just apes Balls.
      What do you actually want for Christmas ?

      • the viceroy’s gin

        …oh, stop whimpering, laddie.

      • James Allen

        A referendum?

  • the viceroy’s gin

    So it’s a full court Cameroonian press by the Speccie teenagers today, I see. It must be the season for giving to the needy. How charitable of you all.

    Previously, we’ve read that Champion Dave is off to Brussels, to valiantly battle the tyrants, who have, unbeknownst to him, opened the gates to allow-in hordes of immigrants. We are not worthy of your efforts, Dave. Taking time away from the estate house, at Christmas of all times. Good stuff, Dave.

    And here in this discussion we find what some poor stupes might consider exceptionally meager growth figures, but that are actually stupendous Cameroonian achievements. Oh sure, some worrywarts will natter that population growth, inflation and QE actually make those negative figures, but what do they know? And what of the skyrocketing national debt, you ask? Pshaw, it’s actually a sign of strength.

    You read that all correctly. Only here in Speccieville will you find such astute commentary as this. Now if you stupes would all just hit that popup, you might get to be as smart as us.

    • HookesLaw

      Do they give away gibberish free with cornflakes these days then?

      • the viceroy’s gin

        Yes, and that’s apparently how you and your fellow socialists got stocked up.

      • paulus

        No, its called three bottles of Gordons a day, thankfully, he decided to enlighten us to economic theory as he cracked open the second; and blessedly not the third.

    • Hello

      “You read that all correctly. Only here in Speccieville will you find such astute commentary as this”

      Indeed. That’s why it has a larger number of readers than Ukip has members.

    • James Allen

      Absolutely right, if you’re pumping in an additional £130bn a year (of which current spending – not capital investment – is about 50%) into the economy you’d expect to get some “growth”, although the fact there’s only about £30bn of it shows just how efficient that stimulus really is. We’re pumping money into the system like never before (and almost penalising people for saving) and then expressing surprise that more money is being spent. Imbeciles.

      • Tom Tom

        The Input/Output stats are really stunning. Skidelsky had a nice article a few days back saying how ROI had fallen dratatically in the West since the 1970s and Credit had been used to plaster over the cracks. Fact is, the West lost it arouind 1970 and with floating forex debt went exponential driving ever-more modest increases in real GDP

        • James Allen

          Productivity per head (i.e. GDP per capita) is no different (in fact, very slightly worse) than at the last election. It’s only population growth that’s causing the economy to grow…. pretty shocking state of affairs, 6 years after the crash. A damning indictment of Govt policy, you might say.

        • Makroon

          Skid bloody delsky !
          Desperate or what !?

    • Makroon

      You are good value when you have a go at the “Cameluvvies” and shut up the trolls, but when you attempt a comment on the “state of the nation”, all of your ignorance and expat out-of-touchness comes shining through.

      • the viceroy’s gin

        Stop whining, lad.

        And fyi, you’d be one of the Camerluvvies.

  • HookesLaw

    ‘By the time this was clear, everyone blamed bankers for the crash –
    when, in fact, it was just reckless economic management which all the
    economists missed.’
    And telemachus.

    • dalai guevara

      No one blames bankers, everyone blames banksters for adding £1tn of debt to £1tn of state debt, making it £2tn+ as a result.

      • the viceroy’s gin

        …so in other words, you socialist nutters are to blame for all of it.

        • dalai guevara

          Are you the Colonel’s donkey now? Do I have a printing press? Did I print? How so?
          You did nothing to oppose it, tovarishch, you were complicit. You have no leg to stand on blathering about what you believe is the work of socialists.

          • David Lewis

            Actually, most who understand the maths believe that the net end result of the bailout will be neutral at worst and the share prices and magnitude of the loan servicing supports this.

            Some people here are still conflating the banking crisis with the structural deficit crisis – two different things – one in 2007 and the other in 2008. I though they only did that in The Guardian.

            • dalai guevara

              We know that, this is not the Guardian. This is a blog for all those who blame anything that ever went wrong on socialism and their contrived definition of what that is.

              Banksters aren’t socialists. They added over £1tn to government debt. This is not ‘socialist’ debt, this debt was socialised.

              • David Lewis

                Rubbish. Even conservative estimates on share sale revenue added to revenue from loan servicing puts the net result at a mild profit for the government/neutral at worst.

                You lot simply make things up as you go along and expect everyone to believe them. Well few do and I do not since I know the difference between the deficit and the banking crisis. You need to look that up before coming back to me.

                Look old chap, it is over for you. You were wrong again.

                • Tom Tom

                  Pity you are so doctrinaire and cannot see General Equilibtrrium effects. Shareholders in Lloyds, RBS, HBOS have been wiped out – they have seen no dividends since 2008. They have had their entire financial planning destroyed. You sound like the chaps in Berlin in 1941 working out how much Jewish life insurance policies were worth and forgetting the cost of the war

                • David Lewis

                  You state the obvious. I was not, as you well know, discussing the terrible consequences for shareholders.

                • dalai guevara

                  Not this topic again…
                  latest ONS dataset dated 20 Dec 2013, PDF format,
                  PSF11B, Page 56 of 57, line 2:
                  http://www.ons.gov.uk/ons/dcp171778_344397.pdf

                  Knock yourself out, mate.

            • Tom Tom

              Fantasist. You don’t have net results until you find an end-point and we are decades away from that. The Western Model is finished through simple demographics. Public Finances should have built surpluses as Baby Boomers worked to pay them out as they aged, but instead politicians blew the increased Social Security Taxes on Benefits and face an empty cupboard as Baby Boomers retire with an economy skewed towards low value-added

              • David Lewis

                Dodging the issue does not change the accuracy of my assertion.

                You merely restate what everyone knows.

          • the viceroy’s gin

            …not that we ever doubted you socialist nutters were responsible, but good of you to admit it.

            • dalai guevara

              You sneaked that one in on the side. No matey, socialising bankster debt is not socialism. Socialising losses isn’t socialism, it is theft.

              • the viceroy’s gin

                All socialism, laddie, you socialist nutters’ handiwork and life’s work. Congratulations.

                • dalai guevara

                  Better you frame this one. Ah no, I’ll do it for you

                  —————————–
                  socialism = socialism
                  socialising losses = theft
                  —————————–

                  there, you’re welcome.

                • the viceroy’s gin

                  Socialist nutter = you.

                • tastemylogos

                  > socialism = socialismsocialising losses = theft

                  delia, You just conjured that definition up out of nowhere. Socialising losses and the state providing succor to industry sounds pretty socialist to me.

                • dalai guevara

                  Ok, you asked for clarification, here it is:

                  ———————————-
                  socialising losses ≠ socialism
                  socialising losses = theft
                  ———————————-

                • the viceroy’s gin

                  …our money belongs to us, until you socialist nutters steal it.

              • tastemylogos

                > Socialising losses isn’t socialism.

                It certainly aint free market capitalism, delia. But one does ‘pool’ in the process of doing so… sounds pretty socialist to me.

  • kyalami

    This does reduce the bad news. However, with official debt continuing to soar (although at a slower rate), we are in for more years of austerity. Balls is utterly wrong: sadly we need to cut the public sector more, not less, while growing the private sector.

    • HookesLaw

      Well yes but parhaps we should say ‘more years of getting by with less free money than we were used to’.
      Unless the nuimpties let in labour again that is.

      • Tom Tom

        Free Money ? You mean the funding of the entire economy through the Bank of England making low interest loans to the Treasury via the Bank Multiplier ? That won’t end…..

    • dalai guevara

      More quangos? Will you never learn to do any work yourself?

      • the viceroy’s gin

        …not if you socialist nutters have your way, and get everybody onto the government teat like you.

        • dalai guevara

          Quangos matey, y o u r private sector solution, not mine.
          I outlined my solution.
          Do.some.work.yourself.
          A smaller privatised state.

          • the viceroy’s gin

            No, matey, the leviathan socialist state is your solution, because you’re a socialist nutter, firmly ensconced on the government teat, like all socialists.

            • dalai guevara

              you make no sense whatsoever.
              Big privatised government – fail.
              Stop talking – resolve the issue.
              Cut government spending on quangos!

              • the viceroy’s gin

                Again, the leviathan socialist state is your invention. You socialist nutters cut no government spending. Your idea is to grow the government, and suckle on the government teat, as ever with socialists.

                • dalai guevara

                  No matey, one more time for the slow learners.

                  Quangos make the state a big state.
                  Without them the state would be forced to do some work itself. There are huge efficiencies in that. Do some work yourself instead of doubling and tripling of in-house and outsourced politburos to disguise the fact that you are too feeble to take the lead.
                  You outsource responsibility, you outsource it all the time. That makes you even slower and more inefficient than the most socialist socialists out there. You have beaten the socialists at there own game – you are even more inefficient than they are!

                • the viceroy’s gin

                  Did you actually think anybody was going to wade through a pile of your gibberish, lad?

                  You’re a socialist nutter. You seek to grow the government, so you can latch onto the government teat, which is the ultimate goal for all you socialists.

                • dalai guevara

                  I seek no such thing.
                  You do not understand what causes government to grow. I explained it to you, but you are too uneducated to understand the simplest of evident realities.

                  You have never worked for, nor with government, you do not understand their workings, you do not understand that it requires at least 5 no. committees to decide anything here, even the simple matter of a bike lane for example.
                  In-house, outsourced, outsourced second opinion, back in-house, up the ladder of at least three hierarchies. For a bike lane! Wahahaha!

                  You are much more inefficient than any socialist, reliant on big privatised government to make decisions for you.
                  You just l o v e being inefficient. It’s in your genes.

                • the viceroy’s gin

                  …and more gibberish to be blathered and left unread, lad?

                  You’re a socialist nutter. You love socialist nuttery. You want to grow the government massively, and you want all to latch onto the government teat. That’s the dream of every socialist nutter.

  • Hayekian2

    Please drop this “Chancelllor has more cash to play with” nonsense!

    First, we have a budget *deficit* of over £100bn, over 6% of GDP, hardly a cause for celebration and largesse. Secondly, it’s our cash … other than the soon to be £1.5tn of debt which will be serviced/repaid by our (grand)children’s cash.

    Public spending is still *way* too high. When we have a surplus, debt below 40% of GDP and a state below 30% of GDP; then we can allow some congratulation.

    • Shinsei1967

      Well quite. Astounding that Fraser has been going on for over two years about Osborne borrowing more than Labour planned (which is silly thing to say anyway as Darling’s plans made no allowance for EUzone crisis or higher oil price) and now because data is somewhat better we have money to spend.

    • HookesLaw

      I agree with your point and that of shisei.
      To be fair to mr nelson, not that i think he deserves it – maybe he was being cynical.
      The OBS do say that on current projections public spening by 2020 will be a lower %age of GDP than at any time since 1948.

      • James Allen

        “OBS (sic) do say that on current projections public spening by 2020 will be a lower %age of GDP than at any time since 1948″…

        Believe that, you’ll believe anything…

      • Tom Tom

        In 1948 50% GDP was Marshall Aid which means Public Spending was TWICE the proportion of GDP you quote.

      • CharlietheChump

        And anyway Nelson contradicts himself in his first paragraph, what goes up can come down, the ONS are so hopeless the figures could just as easily be reduced again by 2016.
        Hayekian2 is, of course, absolutely correct and we have no room at all for unbalanced giveaways, the state is still too large and still conforms to 19th Century command and control unsuitable for the next decade.

        • CharlietheChump

          Get your calculators out and see what a 1% rise in base rate does for our deficit “control”

          • Makroon

            Bond yields have risen by 1% over the past year.

            • the viceroy’s gin

              …not the short term casino money. It’s still nothing.

        • Makroon

          A tax-break for middle-income earners would not be “an unbalanced giveaway” and would be largely self-funding.
          Allowing public spending to drift upward certainly would be.

Close
Can't find your Web ID? Click here