Friday, April 9, 2010

More Good News for the Economy

The National Institute of Economic and Social Research predicts that growth will be 0.4% this quarter (so January-March of this year), the same as it was in the last quarter of 2009.

This is great news if the state of the economy concerns you - regardless of the upcoming election, because of course it'll get a spinning or two in that arena.

You may be of the cynical viewpoint that what does it matter if these GDP figures show growth - what matters is unemployment right? People getting jobs.

GDP is one part of a much bigger picture, but it's important: If the economy is seen to be growing (and 0.4% a quarter is a reasonable rate of growth - not stellar by any means but given the sharp falls in 2008 and 2009 it's growth) then confidence will grow amongst businessmen to invest, creating jobs.

Furthermore, the conditions are good for expansion for many UK firms because of the weak exchange rate: Remember this makes our exports cheaper. Reflecting this, the Grauniad also reports than manufacturing output is up.

It's worth pointing out that in the manufacturing article, the BCC (British Chamber of Commerce, representing UK companies) makes the point that government help will still be needed post election to keep the recovery going.

Now, the Tories propose to cut the deficit drastically post-election if they're in power. They've ring fenced those important things like health and education. So support for businesses has to be one of the areas that would see less funding - and rightly so from a Tory point of view.

Remember: A more right-wing, classical take on economics would say the state should be small, and let business do what it does best without interference from the government. I wonder whether some business leaders will lift their heads above the parapets and voice support for Labour in the coming days?

Finally: The Grauniad. That's what Private Eye calls the Guardian because of the volume of typos in the Guardian. Check out the grammatical error in the manufacturing article (if it hasn't been corrected yet).

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