Tuesday, January 26, 2010

I wouldn't hang out the bunting just yet

You could hardly have not noticed over the last week or so that various economic forecasters were predicting that the latest figures would show our economy coming out of recession.

Well, they were right. According to the ONS, the British economy expanded in the last quarter by a whopping 0.1%!

Yeee hah!

Come, on - get real. That is a pathetic result given that it was driven by several factors - the boost of Christmas sales, a boost to general sales to avoid the restoration of VAT rates. car scrappage, and a considerable fiscal nudge from HM Government and the Bank Of England.

As results per investment goes it is about as good as Manchester City managing a 0-0 draw with Accrington Stanley.

Personally, I wouldn't get too excited about this news - even though I've heard several news reports today in which various commentators seemed to be on the verge of wetting themselves with barely contained ecstasy - which seems odd, given the dire state that our economy remains in, but more about this in a moment.

The reality is that this "recession" is far from over - and in my view, we are yet to see the worst of it. The budget deficit remains immense, our balance of trade remains sickly, our total debt is staggering in its vastness and nobody - and I mean nobody - has a plan to put it right.

Because to put it right will require a decade or more of deep cuts to spending, Savage cuts - not the piffling £100 million here and the billion pounds there which the Lib Dems claim to have identified (I'm sure they could identify far more if they looked a bit harder). It will take a complete re balancing of our economy in favour of manufacturing and production - we can not continue allowing the hundreds of billions of pounds to flow out of our country each year as it does now.

This money does not come back - once it is out of our economy it is out of it for good. The only alternative is to create more wealth to fill the void and that means growing GDP at a faster rate than we've managed over the last decade just to stand still - or resorting to more and more debt as we have done in that time, but that is, clearly, unsustainable.

So, given that our economic outlook remains grim to say the least - why have these news reports and commentators been reacting with such glee to the news that our economy has grown by 0.1%?

I confess that I do not know. I know that thirty years ago they would have reported such news with considerably less fervour than they do now. As such, I suspect is is symptomatic of an increasingly childish and dumb-downed society, but that's just my opinion.


English Pensioner said...

I've been arguing the same on my blog. We require two quarters of negative growth before a recession is declared, but only one quarter of minuscule growth for it to be at an end. These means that even if we have no growth this quarter, we are not back in a recession, so we can't be in recession again before the general election.
And no doubt the 0.1% was actually 0.050001% rounded upwards!

Larry said...

Yet more proof that the media and New Liebour are inextricably linked, particularly the BBC.

bernard said...

Larry -

To be fair to that raddled old whore called auntie BBC, the penny finally dropped when Paxman interviewed the ultra-weird Alister Darling on BBC News Night, later on.
Paxman alternatively mocked and ridiculed the 0.1% growth for the entire interview, while Darling stood there, eyebrows suitably boot-blacked, and replied like the automaton dummy he is.
It was good to watch.

bernard said...

alternately, not alternatively.