UK GDP is 0.2% – pick your excuse
The government paid for Office for National Statics have released their preliminary estimate of Q2 GDP in the UK – there are two more Q2 GDP estimates to come that are more detailed. The result? UK GDP for Q2 was a miserly 0.2%. This chimes rather well with our piece published back in May titled “GDP in the UK is actually 0.1% annually NOT 1.8%”.
On an annual basis the economy is now growing at 0.7% which is way below the Office for Budget Responsibly’s (also government funded – that ‘dot independent’ in the web address is fooling no-one guys) forecast in the March budget:
The OBR forecast remains for a sustained recovery. The economy is forecast to grow by 1.7 per cent in 2011
We’ll be blunt – with all the debt still in the system there is absolutely no chance in the world the UK economy gets anywhere near the OBR target this year.
Visually the decline in GDP looks rather ominous:
As is customary with all bad data points released in the UK they are also accompanied by a plethora of imaginative excuses and this releases is a doozy. Please note that we aren’t making these up:
- The additional bank holiday for the royal wedding
- The royal wedding itself
- The after-effects of the Japanese tsunami
- The first phase of Olympic ticket sales
- Record warm weather in April
Nice to see the old favorite the weather make an appearance, remember all that evil snow last year? And we have to award ONS top marks for creative thinking this time around, apparently a couple getting married and an event taking place next year can really hammer GDP figures, who knew?
In case anyone has forgotten, before the wedding we were being told that just how great a boost it would have for the UK economy, somewhere between $1bn and £2bn were the numbers being thrown about. So now that the numbers stink we blame the wedding for causing it? The ONS really doesn’t hold the intelligence of the UK citizen in very high regard does it?
Lets stop pretending that the above factors are to blame and get real. The economy isn’t recovering and is heading back into recession because the long term imbalances (too much debt, consumption and inflation) are still there. In point of fact things are much worse because all the UK has really succeeded in doing is making things more expensive – and by definition people poorer.
Nothing was fixed in 2008 and in fact the problems were made a whole lot worse by the BoE papering over the problem by money printing. That money printing bought some time but it is fast wearing off and the thin veneer that it was covering is nearly gone, leaving a very broken economy exposed.
What’s more the UK hasn’t shrunk its debt load and cut spending like the mainstream narrative goes, the debt has increased and so has spending. So how can we expect our dear leaders to react in the face of another recession? Not that we really ever left the last one.
As we pointed out on monday the government is now making sounds that it wants the supposed independent BoE to fire up the printing presses one more time to try and recreate the sugar high from the last lot of QE.
From the horses mouth:
Somehow being ‘imaginative’ with money printing sounds so much petter than just plain old money printing. We still fail to see how making people poorer through inflation well help but apparently that’s what passes for government policy these days.
It’s not just the government that is softening up the UK for more money printing, the journalists are at it to. Stefanie Flanders from the BBC wrote:
If we’re “only” talking about a bumpy, anaemic recovery, not a double-dip – and we don’t see a game-changer for the global economy in the next few months, like a US default or a meltdown for the euro – these kinds of measures to support the economy look more likely at this stage than another dose of quantitative easing
Or to put it another way, when the UK officially admits it’s in another recession expect the policy response to be money printing and another massive does of inflation. Perhaps someone should point out that the UK is in this mess because of too much debt, spending and money printing – so exactly how doing all those things on a bigger scale going to help?
Be in no doubt where this heading, the UK will be back in recession soon enough and that will mean more money printing, prepare advisedly.
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Link to this article: : http://www.goldmadesimplenews.com/gold/uk-gdp-is-0-2-pick-your-excuse-4711/