Economic growth slows to 0.3%

karst

cepheus wrote: »

UK GDP grew by 0.3 % in Q1, way below expectations of 0.6%

[FONT=&quot]And Bloomberg are reporting that the UK's inflation rate has dropped to zero.
[/FONT]Its not very promising news.

Thrugelmir

tincans6 wrote: »

Lots of services we can sell abroad, from legal services to premier league football to education, however it seems increasingly the case that we can't produce enough stuff or services that we can sell abroad - at least compared to the stuff we want to import.

And its getting worse.

Nor do we own the companies either. So the profits made are flowing out as well.

cells

tincans6 wrote: »

One good reason why a car or teabag might be more useful is that you can trade it to someone elsewhere in the world for some bananas, wine, coffee beans (to make the latte), steel (to make the scissors to cut the hair) or an Iphone.

I've yet to see a latte or haircut be exported (we shall ignore tourism as naturally we have a deficit in that as well).

Lots of services we can sell abroad, from legal services to premier league football to education, however it seems increasingly the case that we can't produce enough stuff or services that we can sell abroad - at least compared to the stuff we want to import.

And its getting worse.

a free floating currency is meant to sort that out, in that it balances trade and money flows.

if the UK finds that our current exports reduce relative to imports the currency will fall and we will export more and import less until another balance is reached


in my view the intangible stuff is going to do better going forward.

twenty years ago if you made a film (or broadcast a football match) there may have been a max audience of 500 million people. As the world develops that max audience will rapidly grow towards 5 billion people. That means nations that produce goods that have little to no additional marginal cost should do well. We have already seen this to a large extent but it will continue. just look at modern films that have hundred million plus budgets. Thats the world paying for a service

wotsthat

shortchanged wrote: »

I'm sure they have had a nice little stimulus on the car industry.

Even if the PPI refunds hadn't happened the cash would have entered the economy anyway via dividends or bonuses.

The only difference is that anyone on the end of a PPI payout would have spent it very much quicker.

shortchanged_2

wotsthat wrote: »

Even if the PPI refunds hadn't happened the cash would have entered the economy anyway via dividends or bonuses.

The only difference is that anyone on the end of a PPI payout would have spent it very much quicker.

Hence the brief recovery which is now fizzling out.

Backbiter

wotsthat wrote: »

Even if the PPI refunds hadn't happened the cash would have entered the economy anyway via dividends or bonuses.

The only difference is that anyone on the end of a PPI payout would have spent it very much quicker.

You could argue that the PPI money reached far far more people than the bonuses and dividends would have. And the recipients bof the latter would be more likely, l think, to spend their money overseas o,r indeed, stash it in tax avoiding overseas bank accounts. So it would not necessarily have boosted the UK economy the way PPI money has.

Thrugelmir

wotsthat wrote: »

Even if the PPI refunds hadn't happened the cash would have entered the economy anyway via dividends or bonuses.

The only difference is that anyone on the end of a PPI payout would have spent it very much quicker.

Would it? Bank shares are owned internationally. So much of the cash would have simply left the country.

Generali

tincans6 wrote: »

One good reason why a car or teabag might be more useful is that you can trade it to someone elsewhere in the world for some bananas, wine, coffee beans (to make the latte), steel (to make the scissors to cut the hair) or an Iphone.

I've yet to see a latte or haircut be exported (we shall ignore tourism as naturally we have a deficit in that as well).

Lots of services we can sell abroad, from legal services to premier league football to education, however it seems increasingly the case that we can't produce enough stuff or services that we can sell abroad - at least compared to the stuff we want to import.

And its getting worse.

True but I can trade a haircut for coffee beans or a car (ok a cheap one) or any other number of traded items.

The benefits that accrue from trade aren't just international, after all countries are really just lines on a map. If I trade my skills as an asset manager for an Australian investment fund via the medium of money for coffee or a car or a bag of chips that's really just the same as me trading the same skills with a Chinese investment fund (which I do) in return for the money to buy an iPhone or some contaminated baby formula, no?

I think people concentrate on international trade because it's in some way contentious. There's this weird idea that if I buy an iPhone from China I'm putting Australian smart phone manufacturers out of business. Equally, if I pay for a haircut I'm letting Mrs Generali add less value to the family by her cutting my hair.

dktreesea

michaels wrote: »

Don't be silly, hair cuts, lattes and indeed 'legal services' are not proper output. Proper output is stuff you can touch...and to be honest only big heavy things made of metal or concrete, none of that plastic and silicon carp....

Yes, lattes and haircuts get added into the GDP the same way as goods produced for overseas consumption, but there are subtle differences. if a tourist arrives, with money earned elsewhere and buys a latte, then this is a real addition to our economy.


The problem with measuring GDP from the production side is if a UK based person, with money earned in the UK, buys the latte here, it seems to me it's a bit like paying your child pocket money. The child feels better off; this wealth has grown. But in terms over overall household income there has been no increase at all. Likewise the haircut.


It's one thing to take something reared here, say a sheep. The value of that sheep presumably includes all the profits right through to the end consumer. But that's something that has been produced from scratch, with 100% or thereabouts UK produced goods, like grass/feed/whatever else a sheep needs to grow.


Likewise for foreign owned companies. There are no profits to report here, so the real addition to our economy, if indeed there is any, is the costs they incurred, less any of those costs recovered from the UK consumer and repatriated elsewhere.

dktreesea

Generali wrote: »

True but I can trade a haircut for coffee beans or a car (ok a cheap one) or any other number of traded items.

Yes, that's true, but has the economy actually grown if you are spending funds earned in the UK on services provideed by the UK? Say you spend £10 on a haircut, and the hairdresser then takes that £10 and gets their car cleaned. To me that's still the same £10 from a UK economy. It might be great that it gave two people, rather than just the hairdresser, something to do. But in what way did the UK economy grow? There's still just the initial £10 floating around.