When will we get growth again?

MSE_Martin

I actually think earlier than most possibly even the last quarter of this year. While that may be seen as bullish, i think we're in for tight and rapid economic contraction; followed by a period of stagnation at that low level, yet i could see a 0.1%-0.3% growth coming in a quarter soon - not difficult after such huge shrinkage.

lostinrates

MSE_Martin wrote: »

I actually think earlier than most possibly even the last quarter of this year. While that may be seen as bullish, i think we're in for tight and rapid economic contraction; followed by a period of stagnation at that low level, yet i could see a 0.1%-0.3% growth coming in a quarter soon - not difficult after such huge shrinkage.

Thank you.

Its genuinely nice to have your contribution.

By tight and rapid, do you been at levels steeper than we've seen so far or that you see them continuing on this sort of decline til last quarter (or thereabouts) ? May I ask how you've arrived at this position too?

(I'm not a meany posing leading questions, I'm a frightened woman trying to understand a mess.)

Generali

MSE_Martin wrote: »

I actually think earlier than most possibly even the last quarter of this year. While that may be seen as bullish, i think we're in for tight and rapid economic contraction; followed by a period of stagnation at that low level, yet i could see a 0.1%-0.3% growth coming in a quarter soon - not difficult after such huge shrinkage.

Good point.

Personally, I am hard pushed to see what will lead the UK out of recession. Export markets (Western Europe and the US for the most part) are in as bad or a worse position than the UK so exporting the way out seems unlikely.

A falling pound should mean many essentials that are for the most part produced abroad become more expensive (eg food, clothing, furniture and cars) so a consumption led recovery is unlikely.

I don't see the mechanism for recovery for the UK if it can't be domestic or external. It doesn't seem to leave anything unless you think that QE (aka printing money) can lead to extra production and thus rising GDP.

Perhaps I'm missing something. Any thoughts?

JP45

I opted for Q2 2010 but I reckon the recovery, whenever it comes, is going to be severely constrained by the dire state of the public finances and the continuing problems of the finance sector.

As Stephanie Flanders points out (re the 1980s recession) an improvement in one quarter can still be followed by a deterioration in the next:

The economy shrank by just 0.3% in the third quarter of 1980, after a 2.6% decline over the previous six months. Everyone thought that the worst was over, and it was. But the economy still shrank by another 1.7% in the two quarters after that.

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/04/reversion_to_the_extreme.html

*MF*

Generali wrote: »

Good point.

Personally, I am hard pushed to see what will lead the UK out of recession. Export markets (Western Europe and the US for the most part) are in as bad or a worse position than the UK so exporting the way out seems unlikely.

A falling pound should mean many essentials that are for the most part produced abroad become more expensive (eg food, clothing, furniture and cars) so a consumption led recovery is unlikely.

I don't see the mechanism for recovery for the UK if it can't be domestic or external. It doesn't seem to leave anything unless you think that QE (aka printing money) can lead to extra production and thus rising GDP.

Perhaps I'm missing something. Any thoughts?

Paul Mason, the BBC Newsnight commentator, has unearthed the fact (but not the details nor explanation) that the effects of £75bn of QE were included as part of the growth projections from Alasdair Darling - using the example, were that spread over 5 years it might form at least 1% of the growth projections being given - but also quoted the Treasury as saying that there was little chance of anyone actually knowing whether QE would produce those results.

So when you see, say 1.9% or 3.5% - at a a minimum it could be minus that 1% - on that one factor alone. It comes close to being near delusional, imho.

And QE may also throw the Money Markets out of kilter over the immense borrowings they are being asked to digest - we all talk about these borrowings - but is anyone 100% sure that there are willing lenders out there - in particular at what costs - that to me remains a very open question.

Generali

*MF* wrote: »

Paul Mason, the BBC Newsnight commentator, has unearthed the fact (but not the details nor explanation) that the effects of £75bn of QE were included as part of the growth projections from Alasdair Darling - using the example, were that spread over 5 years it might form at least 1% of the growth projections being given - but also quoted the Treasury as saying that there was little chance of anyone actually knowing whether QE would produce those results.

Oooh, very dodgy.

QE shouldn't impact on the level of output, only the price level medium term. In the very short term it may increase output but certainly not over 5 years.

It's pretty shameful of the Government to be lying quite so blatantly. I can understand a little twisting of the truth in the name of party politics but so much now is just crude lying.

*MF*

Generali wrote: »

Oooh, very dodgy.

QE shouldn't impact on the level of output, only the price level medium term. In the very short term it may increase output but certainly not over 5 years.

It's pretty shameful of the Government to be lying quite so blatantly. I can understand a little twisting of the truth in the name of party politics but so much now is just crude lying.

I don't want to mislead - I am giving (I believe/hope) a reasonably accurate verbatim version of what Paul Mason said, and he used that example of over 5 years - but as his example - because having discovered that the effects of QE formed part of the growth projections - he then couldn't get any details or explanation from HMT of just how much of the growth projections involved the effects of QE - * beyond HMT saying (lol)whether they would have any actual effect was anyone's guess (*my words).

But constructing a budget, and projecting growth, on the basis of "printing money" - hey, print enough and we could be out of this mess overnight - and yes, into the next one, caused by QE - and that may well be the actual outcome even at the current level of £75bn.

StevieJ

A_fiend_for_life wrote: »

Second or third quarter 2010 - I think this is overly optimistic though. The amount of personal debt and the number of unemployed and it's impact on businesses suggests to me this is going to last a fair bit longer.

So why have you put second or third qtr 2010

Generali

*MF* wrote: »

I don't want to mislead - I am giving (I believe/hope) a reasonably accurate verbatim version of what Paul Mason said, and he used that example of over 5 years - but as his example - because having discovered that the effects of QE formed part of the growth projections - he then couldn't get any details or explanation from HMT of just how much of the growth projections involved the effects of QE - * beyond HMT saying (lol)whether they would have any actual effect was anyone's guess (*my words).

But constructing a budget, and projecting growth, on the basis of "printing money" - hey, print enough and we could be out of this mess overnight - and yes, into the next one, caused by QE - and that may well be the actual outcome even at the current level of £75bn.

To clarify, I think the Govt's presentation of The Budget was dodgy, not yours.

Apologies for the implied insult - none was meant.

Eyesparky

When we do return to growth I can't see it being sustainably anywhere near at the optimistic levels the Government are throwing around for quite some time.