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Why GDP growth has nothing to do with the World Cup or the warm weather

10 September 2018

2:45 PM

10 September 2018

2:45 PM

We don’t hear much of the phrase ‘despite Brexit’ any more – it is just a little too obvious. Instead, pro-remain news sources have decided to apportion good economic news on the weather and the World Cup. This morning, the ONS announced that GDP growth in the three months to the end of July had risen to 0.6 per cent, the fastest for a year and doing much to make up for a sluggish first quarter. The Guardian was quick to identify what it saw as the reason, giving the news the headline: ‘UK Growth Picks up to 0.6 per cent after World Cup and heatwave boost.’ The BBC followed suit, saying: ‘UK growth helped by World Cup and warm weather’, and the FT: ‘The UK’s scorching summer fuelled a recovery in retail and construction.’

That is, of course, a consensus. Therefore it must be right – just as it is when the same news sources blame bad news on Brexit uncertainty. Or maybe not. The idea that a flagging economy has been saved by a heatwave and the World Cup does not stand up to examination. The strongest sector of the economy was construction, which enjoyed remarkable month-on-month growth of 2.9 per cent in May. Clearly, the construction sector suffers when the weather is especially cold or wet and concrete cannot be poured or other operations undertaken. But it is less obvious why construction should benefit from a heatwave. In any case, in May, when construction enjoyed its strongest month, the heatwave had not really started. It was a dry and warm month in the north, and a dry but averagely-wet month in the south.


Moreover, why should construction workers suddenly up their output because of the World Cup? Even if you want to argue that Harry Kane and his team are capable of inspiring your average brickie to improve his productivity, it doesn’t make sense – the upwards jolt in construction began in May, before the World Cup had even begun.

To be fair to the BBC, Guardian and FT, the ONS itself was responsible for attributing economic growth to the weather and to a four week sporting event – the idea is put forward in the ONS release itself. But that doesn’t detract from the point that it is evidence-free nonsense – something which each of those three news sources should have picked up on. There seems to be automatic assumption by all three, that while bad economic news is due to Brexit, good news is down to entirely unrelated matters.

As I have written here before, the real issue is why the UK economy – or at least the statistics relating to it – seem to have developed a ‘first quarter’ problem. For each of the past four years, growth has stalled at the beginning of the year only to recover strongly later on. Quite why, few seem to be asking, let alone coming up with a reasoned explanation.


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