UK 2Q GDP surpasses all expectations - Fastest Pace In 4 Years

Generali

That's a pretty amazing bounce back in growth.

2 things:

1. It's normal for growth to bounce back like this in a 'normal' recovery from a recession, kinda making up for lost time. Perhaps this will turn out to be a normal recession rather than a deleveraging deflation. I hope so.
2. Given that energy output is up 1.6% this figure is likely to be approximately right unless both figures end up being revised. Higher output causes higher energy use.

I still maintain that the hard route is from emergency measures to normalisation. If you keep base rates at 0.5% while RPI is at 4% and real GDP is growing at 4.5% pa with a budget deficit of 20-25% of GDP and a trade deficit too then you are going to end up in a horrible inflationary mess.

Can the Bank of England finesse the recovery, increasing rates such that inflation doesn't catch but also that the recovery isn't 'snuffed out'? I have my doubts, I have to be honest. If they manage it then I need a rethink about my economic views.

grubby23

tomterm8 wrote: »

The reason for these results is that labour stimulated the economy a huge amount. In essence, they created these results. Now, the tory party is going to change the economic policy, which almost inevitably means a recession in my view. Nothing has changed. These figures just show the last labour government was right (on one issue).

Lots of nonsense. Labour run over the last years a deficit of 10% for one per cent of growth. That means, we were always in a recession, with an real output of -9%.

Really2

tomterm8 wrote: »

And explain how Mr Brown was responsible for the massive increases in deficit of, say, America, Spain, France, or the fact the world experienced negative growth for the first time since world war 2?

The increase in deficit after there recession is not the issue and not something I even said.
It was the deficit racked before the recession that was the killer.

Or maybe you are going to deny that Mr Alexander wrote to departments asking them to produce plans for a 25% cut and a 40% cut?

No are you going to deny you said they are going to cut 5-25% more than labour?
Plans and action are two different things, if you ask for plans for more you can work out the most efficient cuts.

Well, I normally assume that if someone says they would do something, they would actually do it

I take it you were fairly disappointed with labour, I think over the last three manifestoes there was 100 promisess they never carried out.:eek:
Referendum anyone?;)

I agreed torys have increased the tax burden, but it was still less than what labour were planing.... why don't you admit that?


I am not going to pretend the new government are going to do great, it is early days.
But neither am I going to think if labour were still in power things would be better.
Labour had caused a massive deficit before a recession. So I am hardly going to debat they would do a better job now TBH.

So debating this is neither here or there, the current govenment are in because of labour and are sorting out problems left to them from labour.

Generali

grubby23 wrote: »

Lots of nonsense. Labour run over the last years a deficit of 10% for one per cent of growth. That means, we were always in a recession, with an real output of -9%.

It's not quite that simple. As recession hits, Government spending on welfare payments rises and borrowing rises with it. Welfare payments aren't counted as a part of Government spending when measuring GDP so the deficit will rise without an equal rise in GDP.

I take your point though even if I don't agree the maths.

tomterm8

Generali wrote: »

That's a pretty amazing bounce back in growth.

2 things:

1. It's normal for growth to bounce back like this in a 'normal' recovery from a recession, kinda making up for lost time. Perhaps this will turn out to be a normal recession rather than a deleveraging deflation. I hope so.
2. Given that energy output is up 1.6% this figure is likely to be approximately right unless both figures end up being revised. Higher output causes higher energy use.

I still maintain that the hard route is from emergency measures to normalisation. If you keep base rates at 0.5% while RPI is at 4% and real GDP is growing at 4.5% pa with a budget deficit of 20-25% of GDP and a trade deficit too then you are going to end up in a horrible inflationary mess.

Can the Bank of England finesse the recovery, increasing rates such that inflation doesn't catch but also that the recovery isn't 'snuffed out'? I have my doubts, I have to be honest. If they manage it then I need a rethink about my economic views.

Where are you getting your figures from? My understanding is that the deficit is somewhere between 11-13%, and inflation is worse at around 5%.

I really have no idea what the bank of england is going to do... we are in quite a severe monetary and lending contraction, if you look at the M4 figures, and growing away like crivens. Such things are not meant to happen if you read your economics 101 textbooks.

Really2 wrote: »

The increase in deficit after there recession is not the issue and not something I even said.
It was the deficit racked before the recession that was the killer.

Well, the Conservatives agreed with Labour spending plans. We would have been in exactly the same position when Lehman's went bust if the conservatives had got into power a year before. So, frankly what you say makes little sence to me.

Really2 wrote: »

No are you going to deny you said they are going to cut 5-25% more than labour?
Plans and action are two different things, if you ask for plans for more you can work out the most efficient cuts.

I said they were planning, in nonprotected departments, to cut between 5 and 25% more than labour. It's not controversial. Mr Alexander wrote a letter asking all departments to do that. The 2010 budget is explicitly based on 5% cuts to departments greater than labour announced, and after that Mr Alexander said that if he could find greater savings than that he would make them.

I also said that the final spending plans had not been announced.

Really2 wrote: »

I take it you were fairly disappointed with labour, I think over the last three manifestoes there was 100 promisess they never carried out.:eek:
Referendum anyone?;)

Not at all. I have never voted for labour in my life, and believed them to be a bunch of lying barstewards. I was not surprised when my expectations came to be realised.

Really2 wrote: »

I agreed torys have increased the tax burden, but it was still less than what labour were planing.... why don't you admit that?

And you have access to these plans? Interesting. All I can go with is the treasury budget the labour party produced before the election, and the tory budget produced after the election. On these budgets, both parties would have increased taxes, but the Torys increased taxes more than the labour party.

Really2 wrote: »

I am not going to pretend the new government are going to do great, it is early days.
But neither am I going to think if labour were still in power things would be better.
Labour had caused a massive deficit before a recession. So I am hardly going to debat they would do a better job now TBH.

So debating this is neither here or there, the current govenment are in because of labour and are sorting out problems left to them from labour.

I notice you answered none of my questions... the reality is, the conservatives agreed with the policies that "caused a massive deficit before a recession" so I find it hard to see why they would do better than the labour party now.

Generali

tomterm8 wrote: »

Where are you getting your figures from? My understanding is that the deficit is somewhere between 11-13%, and inflation is worse at around 5%.

I really have no idea what the bank of england is going to do... we are in quite a severe monetary and lending contraction, if you look at the M4 figures, and growing away like crivens. Such things are not meant to happen if you read your economics 101 textbooks.

Deficit was a typo, inflation was my dodgy memory.

Deflation is an interesting one. My belief is that there can be good deflation: stuff getting cheaper as workers and processes become more efficient. As a result workers can earn more and prices fall. As you say, it's not in the economics text books.

I've read stuff to say that similar 'good deflation' happened in the 1870s as Germany and the US joined the Industrial Revolution.

Really2

tomterm8 wrote: »

Well, the Conservatives agreed with Labour spending plans.

Just seen your edits.

In what way, that they went trough? if they voted against would they have gone through?

Labour never needed anyones agreement to pass anything. (you could say labour agree with the current cuts as they have gone through)

I have answered some of your questions but you still fail to see a massive deficit before the recession as the cause of the big hole we are in.

If you can't see why things would be better going in to a recession with a surplus the debate is pointless.

Really2

tomterm8 wrote: »

W
And you have access to these plans? Interesting. All I can go with is the treasury budget the labour party produced before the election, and the tory budget produced after the election. On these budgets, both parties would have increased taxes, but the Torys increased taxes more than the labour party.

NI was going ahead, Vat was leaked. Just because the current government introduced them soon rather than later is neither here or there?

Do you honestly think the only thing the last government were going to do was increase NI for the next term?

If so what the hell was going to get the deficit down in the future?

Growth, can't see it being enough but I hate to think what inflation would be (due to a vastly devalued £) when the markets saw we had no credible plan for repaying debt.

tomterm8

Really2 wrote: »

Just seen your edits.

In what way, that they went trough? if they voted against would they have gone through?

Labour never needed anyones agreement to pass anything.

I have answered some of your questions but you still fail to see a massive deficit before the recession as the cause of the big hole we are in.

If you can't see why things would be better going in to a recession with a surplus the debate is pointless.

The reason I find it hard to accept that the 'massive deficit' before the election was not the cause of the problem is that prior to the recession, we had debt to GDP of around 37.5%... lower than the 42% odd that the last conservative government racked up, and roughly at the average of what the deficit had been in the last 30 years.

Since the recession, debt as a percentage of GDP has increased by roughly 30%...

While it would have been good to go into recession with a debt of, say, 29%, which would have been quite achievable with tighter spending I don't think it would have made much of a change to the reality, which is in three years of recession we've doubled the debt we owed...

In essence, I think the difference of debt 5% of GDP over 5 years, would not have made a major difference to where we are now when you are adding that to the debt every 5 months.

4Chickens

You know how they said on the news that growth exceeded that which was forcast and the biggest growth was in the construction industry, well I reckon I know why.

I work for a construction company and have to fill out a National Statistics form every month. Well, my eyesight has been deteriorating and I only got my new specs last week when i noticed that the decimal points on the form were not decimal points but commas. So instead of writing £230,000 I wrote in £230,000,000. Oops:o