On trend, unfortunately
Someone Tweeted almost immediately after the latest GDP figures this morning that you’d need good luck to see a trend int he figures. True GDP rose by 0.5% in June and then fell in 0.5% in July but that is why we don’t tend to look at one month in isolation.
In the three months to July the economy grew by 0.2%, and didn’t grow at all over the last 12 months, which just about says it all.
The UK economy is bouncing along the bottom and that is the best that can be said because it is now facing a long period of higher interest rates, designed to squeeze growth and therefore inflation out of the system. We have already seen employment figures that suggest companies are not hiring and indeed are firing staff.
That suggests very strongly that three monthly growth of 0.2% is about as good as it gets, which is extremely depressing.
The Chancellor has more money coming in because of inflation, higher wages and higher taxes on those wages, but then he has higher costs for almost everything as inflation hits government spending too.
The larger and longer term picture is that without a significant period of sustained growth the UK cannot afford to do what it needs and wants to do, without increasing taxes again or borrowing more.
The Bank of England now assumes that long term sustainable British growth is about 1%. The economy used to be able to manage double that with ease.
But bouncing along the bottom at 1% or less is a disaster. It needs raising immediately and permanently by direct government action: improving infrastructure, more investment, more house building, better training, better utilities, better transport, better trade deals, better just about everything.
Without that nothing can change.
The government seems to think that this is just another annoying period of low growth associated with high energy prices and the war in Ukraine.
It obviously is not, it started long before covid and it shows no sign of bouncing back.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media