Coffee House

Today’s GDP figures are useful ammunition for the Conservatives

28 January 2014

11:16 AM

28 January 2014

11:16 AM

That the UK economy grew by 0.7 per cent in the final three months of 2013, leading to the fastest growth annually since the financial crisis, is obviously very good news for the Coalition. The quarter-by-quarter figures have zig-zagged, but the overall growth for 2013 is 1.9 per cent over the year, which is the most important figure.

These GDP figures from the ONS, published this morning, enable David Cameron to say that this is further evidence of the Coalition’s ‘long-term economic plan’ succeeding, and use the new Tory buzzword,‘security’. And though the economy is still 1.3 per cent below its pre-recession peak (see the graph below), George Osborne can now see a trend that settles him in nicely ahead of the 2015 general election of better-than-expected economic figures (his own forecasts in December 2012 had 2013 GDP growth of 1.2 per cent, and Q4 GDP growth at 0.5 per cent), just as Gordon Brown faced continually worse-than-expected figures in the lead-up to the 2010 election.

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But the detail of the figures also gives Osborne an opportunity to argue back very quickly indeed against Vince Cable’s latest warning that ‘the shape of the recovery so far has not been all we might have hoped for’. The Business Secretary told the Royal Economic Society last night that:-

‘Like the Chancellor, my message is that recovery is welcome, but much hard work remains. My particular focus is how we progress from a short-term bounce-back to sustainable, balanced, long-term recovery.’

Osborne has been pointing out this morning that the growth ‘is broadly based’, with the manufacturing sector growing fastest. The table below shows growth by sector: while manufacturing grew by 0.9 per cent, the construction sector contracted by 0.3 per cent.

GDP Agriculture Production Construction Services
2013 Q1
0.5 -5.3 0.6 -0.4 0.5
2013 Q2
0.8 1.9 0.8 2.6 0.6
2013 Q3
0.8 -3.2 0.6 2.6 0.8
2013 Q4
0.7 0.5 0.7 -0.3 0.8

Treasury Questions starts at 11.30 today: while Ed Balls will be hoping to use his line about the 50p tax, George Osborne and colleagues have quite an easy task in flinging figures back across the Chamber at him.

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  • MarcusPod

    “Today’s GDP figures are useful ammunition for the Conservatives”… the Tories have played so fast and loose with statistics lately, they’ll probably shoot themselves in the foot yet again.

  • Jupiter

    From your own table

    Q1 0.5
    Q2 0.8
    Q3 0.8
    Q4 0.7

    Total 2.8

    So where does 1.9% growth come from? Can nobody add up these days?

  • LK

    The ONS statistics are 0.4% for Q1, 0.7% for Q2, 0.8% for Q3, 0.7% for Q4. That makes 2.6% total. Why the headline of 1.9%? What am I missing?

    • Mynydd

      The 1.9% is the increase in GDP for the whole of 2013 over the GDP for the whole of 2012. It is not by quarters.

  • Mynydd

    With respect to the graph, GDP growth rate, (source ONS (IHYQ)) I note the following
    – Between 2008 Q2 and 2009 Q2 there were 5 quarters below the line ie negative growth with a low point of 3% while Labour were in power.
    – Between 2009 Q3 and 2010 Q3 there were 5 quarters above the line ie positive growth with a high point of I% then Labour lost power
    – Between 2010 Q4 and 2013 Q4 there were 4 quarters below the line ie negative growth with a low point of 1% Conservatives in power
    -Between 2010 Q4 and 2013 Q4 there were 8 quarters above the line ie positive growth with a high point of 0.8% conservatives in power.
    From this I conclude:
    Even though there was a steep drop in GDP the last Labour government brought the country out of recession with growth over 5 periods before it left office.
    The present government has push the GDP negative for 4 quarters, the equivalent of one year and has not produced positive growth for more than 4 quarters
    The Government’s GDP peak of 0.8% is below the 1% the last government achieved after the recession.

    • Tony Quintus

      Labour’s return to growth was based on giant gobs of borrowed money, growth under the co-alition has come while public sector borrowing is falling. 6% less of GDP is money pumped in by government borrowing today compared to fiscal year 2009-2010.

      • Mynydd

        I will repeat until I am blue in the face. Mr Cameron/Osborne will borrow more in 5 years than Labour borrowed in 13 years including the borrowing to get us out of the world wide recession.

        • David B

          France went for the higher borrowing and higher tax to support growth and the plan failed. Therefore the only option to reduce debt faster is to cut public spending.

          I assume you advocate larger spending cuts than currently proposed?

        • Tony Quintus

          And I will once again tell the deluded Labour supporters that leaving a structural deficit of nearly £200 billion (inflation adjusted) means that unless you wanted the Tories to scrap say, the entire welfare state or both the Deparment of Education and the MOD then DEBT was going to rise while the record deficit was reduced.
          How would you have gotten rid of Labours massive deficit overnight, just the redundancy pay for all the non-jobs created by Labour has cost a fortune.

    • David B

      Illusion based on borrowing. The growth rate was lower than the total amount borrowed and spent.

      • Mynydd

        I quite agree for 2013 the growth rate was lower than the total amount borrowed, which I understand is £100bn

      • Tony Quintus

        The total amout borrowed and spent has fallen from almost 12% of GDP to less than 6% and growth has still happened, it is only when borrowing as a percentage of GDP increases, as it did in fiscal years 08/09 and 09/10 and then started to fall in FY 10/11 after the coalition came to power.
        We haven’t had less growth than the figures suggest, the real private economy has grown even faster to take up the slack from the reduction in government borrowing.
        And this is why Labour is seen as economically illiterate.

  • LK

    Don’t understand. Surely the growth by quarter is 0.4% plus 0.7% plus 0.8% plus 0.7% according to the ONS figures. That’s 2.6% in total for the 4 quarters not the 1.9% being put about. What am I missing?

    • Mynydd

      See above, you are missing a basic understanding of the ONS figures.

  • BarkingAtTreehuggers

    GDP not even represented in full figures now but in percentage changes only (never mind omitting per capita figures and relating them to M4 money supply)?
    What is wrong with these financially illiterate journos – do the government pay them to place these adverts? Surely it must be contravening current EU regulations not mark it as such. I am inclined to inform the Press Complaints Commission if this is noted to be happening again.

  • HookesLaw

    And on economics, the IFS, which Balls was happy to quote last year, says Labour’s claims that 50% tax would raise £10 billion is bunkum. More like 100 million.
    What should be worrying for the Scottish NO campaign is that the idiot Darling was willing to go along with the pretence. It shows him to be shallow and opportunistic. Mind you maybe that’s the right sort of man to fight Salmond.

    • MichtyMe

      A champion house flipper however.

    • Mynydd

      How many school buildings, and/or potholes can be repaired by £100 million?

      • Holly

        ZERO!
        The money would go on wages under Labour.

  • HookesLaw

    What a hilarious bunch of saddo miserable dipstick comments from a gang of losers who want to talk the economy down so they can let in Balls to tank it good and proper.

    • Makroon

      The interesting part is that the “ignore-the-facts-doom-meisters”, are not the usual Labour trolls. Red and Balls have “welcomed the recovery” through gritted teeth.
      The doom-meisters from la-la land, are those self-styled “patriotic UKIPpers” (and the G&T socialist bloke who loves to abuse everything Brit from his offshore perch).
      Why would the “patriotic UKIPpers” be so eager to talk the country down, do you think ? Aren’t they supposed to be nationalists ?

      • HookesLaw

        They are not kippers any more – Farage thinks they are fruit cakes and loonies.

    • Mynydd

      There is no need to talk the economy down, the latest GDP figures do it for you. GDP is down, I repeat down, from 0.8% to 0.7% and this 0.7% includes the plastic/debt fuelled Christmas spending boom.

    • saffrin

      You are funny.

  • saffrin

    Not quite keeping up with inflation then. Get back to me when there is something to celebrate, like 100% full employment perhaps.

    • Hello

      It’s inflation adjusted.

  • Jericho One

    Just another case of ‘cooking the books’ to make things appear rosy. GDP is not an accurate indicator of prosperity.

    In reality, all what has happened is that people are being forced to sign-off and take part-time jobs in the most unfavourable conditions. That is not progress…

    • Hello

      80% of the new jobs created since June have been full time.

      • HookesLaw

        30 – love.

      • Jericho One

        That doesn’t prove anything. Full-time jobs can be exploitative too…
        The utilitarian concept of “the greatest good, for the greatest number” of people is ethically flawed if a minority have to be ground down into the dust in order to obtain it.

        • Hello

          Actually it proves that your assessment was at least partially wrong. Which is what it was intended to do.

          As for being “ground down into the dust”, I think you’re being a little theatrical.

          • Jericho One

            “I think you’re being a little theatrical.”
            It’s difficult to develop empathy, unless you’ve been in a hopeless situation yourself…

        • HookesLaw

          Oh go and get lost you miserable oik. So brilliant were jobs under Labour that they all went to Poles

          • Mynydd

            Not true, returning from overseas I had a well paid construction job under Labour, unlike those now serving coffee.

      • Mynydd

        What about before June, like last year. New jobs should be classified from the time Mr Cameron took office not some date that suits your view. We have enough of this fiddling statistics from the government.

        • Holly

          The fact that NEW jobs are being created really get’s to you.
          WHY?
          Is the creation of NEW jobs so terrible?
          Are people who work part-time ‘deal breakers’ for you?
          Do you realise our economy is almost back to the pre Labour induced disaster?
          Look at any ‘pretty’ coloured graph or chart, to see the huge plunge in the UK’s economy left by Bozo & Co. It was damned near vertical!
          Yet despite all the booby traps set, and the ‘no money’ left note, inherited from the previous Labour treasury bods by the way, over one million NEW jobs have been created in the private sector from the time Cameron took office, and that my dear is what REALLY irks you.

    • Holly

      So you think being employed part -time is not ‘progress’?
      Going from unemployed/unemployable to employment is great progress, and a much better way to find full-time employment, if the employee wants to work full-time, because many do not want to, do not need to, or can not, due to other responsibilities.

      • Jericho One

        You miss the point. It’s not about getting people off the dole as a principle – it is more about keeping labour costs rock-bottom so everyone else can feed off the prosperity that this creates…

        That somehow people are better off (both socially and psychologically) in full-time low-paid exploitative employment is complete BS. Low-paid work carries negative status in our society – you are invisible and don’t exist… A non-person. Yet it makes the figures look good.

        My personal evaluation of the British state, is that rather than ironing out disparities between the classes – it actually exacerbates them; meaning that those who are already advantaged, will become even more advantaged by drawing upon state resources which are of out of reach to those lacking the necessary requisite skills and little understanding of how to make the system work for them.

  • Reconstruct

    You need to get over to your Telegraph colleague Jeremy Warner, and have it out with him.

    • HookesLaw

      Warner is a pillock of a Jeremiah who can barely tie his own shoelaces. perhaps he wpuld prefer the balanced economic performance of France Germany Italy or Spain.

    • Makroon

      Nah. Warner, like Evans-Pritchard, Bootle and Halligan, have just run out of ideas, so concentrate on US-style apocalyptic tales (at least AE-P is entertaining. If you want balanced and insightful economic commentary, read David Smith in the Times, or Hamish McRea in the Standard and Indy.

  • http://english-pensioner.blogspot.co.uk/ english_pensioner

    To the majority of the General Public, the figures will mean absolutely nothing. To me they are meaningless as they don’t take into account population changes. If, for example, the population doubled, one might reasonably expect the GDP to double. To many voters, tell them the GDP has increased and they would probably say “What’s the GDP”

  • saffrin

    Services +0.8?
    What’s that, banking sector or lap dances?

    • Jericho One

      More like burglaries and hospital treatment.

  • Alexsandr

    what about GDP per capita? that is by far the more meaningful number.

    • the viceroy’s gin

      Please. The Speccie teenagers are data-challenged enough, without you forcing an arithmetic exercise onto them. Be a good sport, and just let them mime Boy George’s propaganda in peace.

    • MichtyMe

      Yes, the per capita is interesting, Switzerland has a per capita twice the UK. Can’t this government do something, perhaps consider cuckoo clocks.

    • HookesLaw

      In
      2010 GDP per capita increased by 8.2%
      2011 GDP per capita increased by 1.4%
      2012 GDP per capita increased by 8.2%

      http://countryeconomy.com/gdp/uk

  • IanH

    Please let us not forget that the ONS construction index is relatively new, and is known to have issues at this time, so should be treated with caution when trying to draw any conclusions

    • Mynydd

      Where did this come from?. The ONS this morning didn’t give such a warning.

    • telemachus

      What it does show that is robust is that the recovery is far from balanced and seems to be underpinned by a property fueled consumer boom reminiscent of that that led to the US subprime
      Osborne can retreat to the shadows

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