Economic growth slows to 0.3%

CLAPTON

dktreesea wrote: »

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.

No not correct I'm afraid


Think of the economy of the whole world.
No imports and no exports as we are looking at the world
Your logic say nothing of value is produced as nothing is exported.

Goods and services are goods and service whether or not they happen to be exported or used by tourists or consumed by locals.

And by the way, the Latte sold to a foreign tourist is a loss to our economy and not an addition. The money they give us can then be used to buy a foreign product which is a addition to our economy.

antrobus

dktreesea wrote: »

...But in what way did the UK economy grow? ....

By one £10 haircut and one £10 car clean.

dktreesea wrote: »

...There's still just the initial £10 floating around.

That's just the means. The end is the haircut and the car clean.

Generali

dktreesea wrote: »

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.

It's gains from trade. I can manage money better than a hairdresser. He can cut hair better than he can wash cars.

Let's take this tenner. Perhaps the hairdresser could do two haircuts in an hour but only wash one car. Better then to cut two people's hair as that way they can get the car done and go out for a pie and a pint after work. If the hairdresser was washing cars instead the pie and pint wouldn't be consumed.

wotsthat

Thrugelmir wrote: »

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

There's little doubt that if the PPI cash hadn't hit the economy then the dividends and bonuses would instead.

Arguing that the PPI route was better for the economy because bank shares are traded internationally is semantics. It's just as easy to surmise, based on a similar supposition, that PPI cash left the country rapidly as the recipients rushed to buy imported trinkets.

wotsthat

shortchanged wrote: »

Hence the brief recovery which is now fizzling out.

You really haven't enjoyed living in a country with the fastest growth rate in the developed world have you?

PPI is a lazy way to explain it away whilst playing to your prejudices.

Thrugelmir

wotsthat wrote: »

Arguing that the PPI route was better for the economy because bank shares are traded internationally is semantics.

Not at all. Ownership of an asset determines where the profits flow to.

antrobus

wotsthat wrote: »

You really haven't enjoyed living in a country with the fastest growth rate in the developed world have you?

PPI is a lazy way to explain it away whilst playing to your prejudices.

It would be a bit unfortunate for those, like the OP, who appear to favour a Labour government, if it were the case that the recovery was indeed "fizzling out". Very bad timing I'd have thought.