Wednesday, July 25, 2012

GDP figures

Today saw the announcement of the first round of GDP figures, the Office for National Statistics' first attempt at working out what happened in 2012Q2, or April, May and June of this year. They base these numbers on something like a quarter of the total amount of data available for that period, and hence sometimes these numbers can be a little inaccurate.

The announcement today was that GDP fell by 0.7% in April, May and June of 2012, contributing further to the recession that began in the last three months of 2011. Overall, according to these figures, GDP is now lower than it was when the Coalition came to power. There's plenty to be sceptical about in the figures though, as David Smith points out. There's more reflection at the FT also, and following the link about hysteresis takes you to the IMF's recent prognosis on the UK - the prospects are not particularly promising.

The IMF, contrary to its previous pronouncements on the UK economy, is now recommending continued loose monetary policy and fiscal policy - calling on the Coalition to abandon its austerity drive.  Of course, the government is never going to admit it's changing to Plan B, but recent announcements regarding public spending, as Jonathan Portes points out, are a tacit acknowledgement of this.  The deficit remains eye-wateringly large, while interest rates are only low because of a lack of growth prospects rather than any confidence in the government's economic policy (despite the government's insistence to the contrary), hence little has changed since 2010 when there was no alternative to austerity...

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