UK Q2 GDP at new risk of downward revision tomorrow

nearlynew

Really2 wrote: »

Yes but unless some one tells you you automatically think 65. Especially this day and age.

I've been planning my retirement for 15 years now and regularly review my position.

And there are 2 things I have never factored into my calculations -

1. the value of my home

2. the state pension

Really2

nearlynew wrote: »

I've been planning my retirement for 15 years now and regularly review my position.

And there are 2 things I have never factored into my calculations -

1. the value of my homes

2. the state pension

Homes Don't worry I am not bothered, I am happy you have done well.

But some of your over egged comments do make me laugh.

Don't have to answer, but are you going to buy again if prices don't go below this years lows.

nearlynew

Really2 wrote: »

Homes Don't worry I am not bothered, I am happy you have done well.

But some of your over egged comments do make me laugh.

Don't have to answer, but are you going to buy again if prices don't go below this years lows.

I've only got one HOME mate.
The other property I own and let is someone else's home. But even that is no big deal in my overall plan.

I will not be buying another house to let, but I may, when prices come down another 10-20 % consider buying a new family home (a house that I'm tracking on property bee).
But I'm happy and settled where I am anyway so don't really care either way.

Really2

StevieJ wrote: »

:rotfl: He squeezed that one out of you, a classic move Really

It's the memory, it would trip a centipede eventually.;)

Jonbvn

So is this article spin, in as much as it is saying not so bad, "bad-news"?

StevieJ

Official GDP release

http://www.statistics.gov.uk/pdfdir/oie0809.pdf

Generali

StevieJ wrote: »

Official GDP release

http://www.statistics.gov.uk/pdfdir/oie0809.pdf

Thanks StevieJ.

It's interesting (to me at least) that when you look at the figures, Financial Intermediation and Business Services and Finance are two of the most resiliant sectors in the economy. The former along with Ownership of Dwellings are the only predominantly private sector parts of the economy to show rising output. Government output is up 5%.

Perhaps The City will be leading the UK out of recession rather than the more usual manufacturing/exports (I'm not being sarcastic here).

Inventories are down £4,581,000,000 on the year (or 1.4% of GDP). Investment (aka Gross fixed capital formation) is down 15.1% from 17.0% to 15.1% of GDP.

Falls in investment from previous recessions:

1974-1975, from 21.5% of GDP to 20.5% of GDP - drop of 1.0% of GDP
1979-1980, from 19.3% of GDP to 18.7% of GDP - drop of 0.6% of GDP
1989-1990, from 21.6% of GDP to 20.5% of GDP - drop of 1.1% of GDP
2008-2009, from 17.0% of GDP to 15.1% of GDP - drop of 1.9% of GDP

So investment has fallen from already historic low levels. Part of this can probably be explained by the rise of the service sector which generally speaking needs less capital than manufacturing, part by the big fall in house building, part by the recession. TBH I'm pretty shocked that the starting point is so low compared to the 1980s/1990s, especially given the boom in housing. Even in Q1 2007, investment was only 17.8% of GDP.

I guess all that New Labour social legislation has put off companies investing in the UK. That sort of thing is always a trade-off between higher GDP and workers (quite reasonably) not wanting to come home from work with fewer legs than they left home with.

Oh and FWIW, 2008-2009 has seen the first Year on Year fall in nominal GDP (ie not adjusted for inflation) since the data series started in 1948.

Generali

Badger2000 wrote: »

Wasn't it the car scrappage schemes that made a major contribution to the improved GDP figures.

Car sales increased 2.4% in July from June but were 22.8% down year-on-year in the UK - I dont think that should be described as a successful policy if the aim is to increase car sales.

I believe the US version has been a great success however, so successful they've had to close the scheme early as the money put aside for it has all been spent.

vivatifosi

Generali wrote: »

So investment has fallen from already historic low levels. Part of this can probably be explained by the rise of the service sector which generally speaking needs less capital than manufacturing, part by the big fall in house building, part by the recession. TBH I'm pretty shocked that the starting point is so low compared to the 1980s/1990s, especially given the boom in housing. Even in Q1 2007, investment was only 17.8% of GDP.

I don't know the answer, so I'm sort of "thinking out loud" (well in print anyway) here, but given the big move within what's left of the manufacturing sector towards Just In Time processes during and since the last recession, wouldn't there have been a structural as well as a cyclical destocking which may, in part, also relate to the lower business investment stats?

Generali

vivatifosi wrote: »

I don't know the answer, so I'm sort of "thinking out loud" (well in print anyway) here, but given the big move within what's left of the manufacturing sector towards Just In Time processes during and since the last recession, wouldn't there have been a structural as well as a cyclical destocking which may, in part, also relate to the lower business investment stats?

Quite possibly. That would certainly explain why investment started at a lower point although would not explain why the drop is so much greater than in previous recessions.

My suspision as to why the drop in investment is so big is because the UK is up poo creek without a paddle. We'll see how normalisation of the economy works out.