On track delivering the growth plan to rebalance the economy. I have just been watching the Faisal Islam interview with the Chancellor of the Exchequer and everything is OK. The economy is rebalancing, the supply side is improving, the Chancellor is not for turning because there is no alternative. The borrowing figures are on track and growth in the British Economy is welcome.
If this recovery is on track, then I am on the wrong train. Growth in the second quarter was just 0.8% year on year compared to 2.5% in the third quarter of 2010. The economy is slowing and it is difficult to see the impetus to growth in the second half of the year. Slow growth is already impacting on government borrowing and the targets for the year will not be achieved.
The UK economy has grown by just 0.2 per cent (quarter on quarter), with the Japanese tsunami, Royal Wedding, and April bank holidays all having an impact, according to the ONS.
“The latest gross domestic product figures for the second quarter of 2011 suggest the economy has grown by just 0.2 per cent following an increase of 0.5 per cent in the first quarter of 2011. The April bank holidays, the royal wedding, and the effects of the Japanese tsunami, all had an impact on the growth rate. These estimates are broad brush and illustrative. There can be no certainty as to the impact of the special events and there may be other factors at play," the ONS said.
The ONS is beginning to sound like a beleaguered sales team under pressure to hit targets. Too hot, too cold, too wet, too dry, Christmas too early, Easter too late. Missed sales targets that’s our fate, the old mantra.
According to the ONS in Q4 there was too much snow, in January not enough snow, April was too warm and the bank holidays and the Royal Wedding hit the growth figures in the second quarter. Heaven knows what would have happened to GDP if it had snowed on the day of the Royal Wedding.
The march of the makers, rebuilding the workshop of the world, is beginning to slow with manufacturing growth up by 2.3% compared to a high of nearly 5% last year. Service sector growth was just 1.2%. We are no longer a nation of shopkeepers, we will become a nation of online traders. This recovery is not on track, it is slowing badly. The economy is not rebalancing, it’s slowing down.
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The views expressed are my own and in no way reflect pro.manchester policy. In no way should the comments be considered as investment advice or guidelines or reflect political bias. UK Economics news and analysis : no politics, no dogma, no polemics, just facts. JKA is a visiting professor at MMU Business School, an economist and specialist in Corporate Strategy, educated at LSE, London Business School with a PhD from Manchester Metropolitan University.