UK In Double Dip Recession

UK GDP has contracted by 0.7% in the second quarter of 2012, thus bringing the UK into a double dip recession.

However, this figure needs to be taken with a pinch of salt, ONS figures are out of date and are invariably wrong.

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Britain Back in Recession?

According to figures released by the ONS, the UK is back in recession.

However, as with all figures produced by the ONS, the data needs to be taken with a pinch of salt. ONS figures are notoriously unreliable and as with all previous figures they will be revised upwards in the coming weeks, thus taking Britain out of recession.

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Oh The Irony - Panic Buying Saved Britain

In a twist of irony, it seems that the panic buying of petrol caused by the government mishandling of the tanker drivers' dispute may have helped pull Britain out of recession.

Figures from the Office for National Statistics (ONS) showed a 1.8% month-on-month increase in retail sales volumes and a 3.3% year-on-year rise. The increase was above economist forecasts, and were partly helped by a 4.9% increase in petrol purchases.

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Pensions Crisis Looming

The Office for National Statistics (ONS) has released figures that show that the number of people contributing to personal pensions fell from 7.6M in 2008 to 6.4M in 2009 (a fall of 1.2M).


Contributions by savers into personal pensions fell by over £2BN between 2008 and 2010, from £20.9BN to £18.7BN.

For why?

People are skint, returns are abysmal and the financial services industry in the UK is despised.

The future is bleak indeed!

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Inflation Falls

The Office for National Statistics (ONS) report that consumer price inflation (CPI) fell to 4% in March, contrary to the expectations of "experts" who were looking for a figure of around 4.4%.

Retail price inflation (RPI) also fell to 5.3%.

The reason for the fall is being attributed to the price war being waged between supermarkets, which has pushed down the cost of food and drink. Additionally, the rise in VAT has probably now worked its way through the system.

It would be folly indeed, given the poor sales figures being reported by the high street stores, for the Bank of England to raise interest rates in the near future.

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Real Incomes Fall

The Office for National Statistics (ONS) reports that "real" incomes fell by 0.8% in 2010, from £14,181 per person to £13,980.

This is the first drop since 1981.

The fall, according to "experts", is due to salaries being eroded by inflation (something that the man in the street could have told the "experts" months ago).

The fall will add to the sense of gloom amongst consumers, and will inevitably hamper any possible growth in the economy.

However, as with all statistics provided by the ONS, these figures should be taken with a pinch of salt. Statistics from the ONS are always late, and invariably have to be adjusted some months after publication.

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The Miguided Hawks of The MPC

The Telegraph reports that according to the latest MPC minutes, released today, the Bank of England chief economist Spencer Dale has joined Martin Weale and Andrew Sentance in calling for an interest rate rise.

The "hawks" deem inflation to be a significant threat to the economy.

They are wrong:

1 The impact of the austerity budget has yet to be felt, once that kicks in there will be a significant deflationary pressure on the economy.

2 The economy is teetering on the edge of another recession, any upward increase in interest rates will push the economy over the edge.

3 An inflation rate of 4%-5% is bearable for a year or so.

4 The "inflation" that the MPC hawks fear is largely down to the rise in VAT in January, and the ONS (as per usual) erroneously under reporting inflation (clothing) for several years.

In short, rate should be kept where they are for the time being.

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Inflation Up

Depending on whether you follow the Consumer Price Index (CPI) or Retail Price Index (RPI) as a measure of inflation, the ONS reports that inflation in January was 4% and 5.1% respectively.

The Bank of England's target for CPI is 2%, as such there is increased pressure from some quarters on the Bank to raise interest rates in order to tackle the inflationary bubble that appears to be forming in the economy.

However, the reality is that if the Bank ups interest rates the economy (which has yet to be hit by the austerity budget) will be sent into free fall.

The Bank should hold its nerve, and wait for the effects of the austerity budget to kick in.

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Economy Shrinks 0.5%

The Office for National Statistics (ONS) has released figures for Q4 2010 that show that the UK economy contracted by 0.5% in this period. "Experts" had been predicting a rise of 0.5%.

Needless to say, the weather is being blamed for some of this fall.

However, cold snap or not (even allowing for the fact that the ONS invariably has to revise its figures), it is clear that any rush to raise rates (as being mooted by some "experts") would be folly indeed when the economy is so very clearly "fragile".

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Inflation

The Office for National Statistics (ONS) reports that the annual rate of CPI (inflation) has risen from 3.3% in November to 3.7% in December.

These figures will be used by some to push the MPC into raising interest rates.

However, given the shaky state of the economy, any rise in rates should not take place until a commitment from banks and lending institutions (who already charge significant rates on loans/debts) that they will not use a rise in rates to extort further money from people already heavily in debt.

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Unemployment Rises

The Office for National Statistics (ONS) has reported that the number of people claiming unemployment benefit has risen by 2,300 in August, the first rise since January.

Whilst the rise may seem "small" (unless you are of course one of the 2,300), it goes against the expectations of the "experts" who had predicted a fall of 3,000.

On the face of it, this of course is not good news. However, it kicks in the teeth the nonsense being spouted by some sections of the media recently that within 2 years Britain will be luxuriating in a boom that will drive interest rates up to 8%.

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Growth

As ever, figures provided by the ONS have had to be revised.

This time the figures for growth in Q2 2010 have been revised upwards, from 1.1% to 1.2%. This is the fastest quarterly growth in the UK since 1999. However, the economy had contracted by more than 6% before this.

A large part of this growth is made up of inventory building by companies, therefore it is presumed not necessarily to be sustainable.

Ed Balls, a Labour leadership candidate, used the revised figures to warn of an economic hurricane hitting the UK if the government cuts public expenditure.

The government, on the other hand, notes that the improved growth figures give them a sound base from which to cut excess public expenditure.

Doubtless both are right, but both will also be proven wrong.

Such is the nature of economics and politics!

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Beware Food Price Inflation

The Office for National Statistics (ONS) have released figures that show that food prices have risen by 3.4% over the last year.

This has prompted Mervyn King, the Governor of The Bank of England, to express some surprise over the size of the rise.

He should not read too much into the numbers, especially as they are unexpectedly high, ONS figures are notoriously unreliable and we may well see contrary ones next month.

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Trade Deficit Improves

Unexpectedly good news relating to the trade deficit has been reported by the Office for National Statistics (ONS).

Britain's trade deficit narrowed in June to £7.4BN, as a result of exports rising at four times the pace of imports.

However, the country still has a trade deficit and the figures are somewhat out of date (ie they are June's). Additionally, the ONS is not renowned for its accuracy and it is likely the the figures will be revised at some point in the future.

As I have noted before, using out of date inaccurate figures to run the economy (or even to try to make people "feel good") is questionable to say the least.

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Recession Worse Than Thought

The ever "reliable" Office of National Statistics (ONS) has issued revised data for the UK economy for Q1 2010.

The revised data shows a decline in output of 6.4%, compared with the original data that showed a 6.2% decline in output.

However, the ONS has left its earlier estimate for Q1 growth of 0.3% unchanged.

The bad news is that the "growth" was on the back of a revised increased in government consumption of 1.5%, rather than the original increase estimate of 0.5%.

Quite what use these statistics, and indeed the ONS, are to anyone given that they are subject to regular revision and that they are after the event eludes me.

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Darling Receives Pre Budget Boost

In the run up to tomorrow's "eagerly anticipated" budget, Alistair Darling has received something of a boost from the inflation figures.

The Office for National Statistics (ONS) reports that inflation (consumer prices index - CPI) fell to 3% in February.

However, the retail prices index remained at 3.7%.

Optimistic forecasters believe that inflation will fall back to 2% by the end of the year.

Doubtless the wave of optimism that these figures has unleashed will be somewhat dampened after tomorrow's budget, which will bring home to roost a few truths about the real state of the economy.

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Smoke and Mirrors

Data released by the Office for National Statistics (ONS) this morning shows that the number of people claiming jobseeker's allowance fell by 32,300 in February, to 1.59M.

The total number of unemployed also fell, down 33,000 to 2.45M between November and January.

Labour, and ill informed media organisations, will of course claim that this heralds a recovery.

However, the number of people actually in employment fell by 54,000. The employment rate is now in fact at a 13 year low.

This apparent contradiction comes about because people are in fact pulling out from the labour market, or being taken out of the labour market by government "non" job schemes.

The number of people of working age counted as "inactive" is at an all-time high, 8.16M.

In effect, a large number of people are giving up on finding work.

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Upward Revision

Last week saw the Office on National Statistics (ONS) issue revised growth figures for the last quarter of 2009.

The initial figures for growth of GDP) were revised upwards from 0.1% to 0.3%.

However, before champagne corks are popped, the ONS also revised downwards the overall contraction in GDP during the recession; from a 6% contraction to a 6.25% contraction.

Hardly time for celebrations just yet!

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Recession Over?

Official statistics, as had been widely predicted, now show that Britain finally left recession in Q4 2009.

The last major economy to do so.

The Office for National Statistics (ONS) released figures today that show that GDP grew by 0.1% in the last three months of 2009.

However, there are a number of caveats:

1 The figures are only preliminary, and could be revised up or down. Given that the ONS has a record of inaccuracy, not too much should be read into the figures.

2 0.1% is not exactly "stellar performance", and indeed the UK is the last major economy to move out of recession.

3 People in the UK will not notice any change to their lives (whether they are unemployed or well off) from this alleged 0.1% growth.

This is most certainly not the time for celebration, or trying to take credit (as the government is doing). The UK is heavily in debt, and the effects of the recession (higher taxes and high levels of unemployment) will be felt for many years to come.

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Still In Recession

The UK economy contracted by 0.2% between July and September, this is an improvement on the original ONS figures of a 0.3% contraction.

Proving once again that ONS figures are unreliable, out of date and worthless.

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