I was all ready to write this on Monday evening, I’d sorted my links and aggregated a good selection of articles for your perusal. I skimmed the newspapers online last thing last night and … I knew I’d have to wait a day.
This happened. The Office of National Statistics, the body that reports the state of the UK economy to Parliament, reported that the economy had tanked (the BBC are more tactful, reporting a ‘sharp contraction’). Regardless of the language, the figures show that people are spending less, that more people are out of work and that the country (note: not the government) is losing money (GDP, or Gross Domestic Product measures how much the economy is worth and that has reduced by 2.4%).
Worse luck, this is set to continue. The OECD, an international advisory group of which Britain is a member country, predict that output (measured by GDP) will fall this year by 4.3% and the economy will be stagnant in 2010.
The Treasury predicted that the recession wouldn’t be so pronounced in the UK. If these figures are right (and theirs are therefore wrong), it would mean they may have spent too much money compared with what they expected to earn back. This has massive political implications, and the fall out has already started (I’ll discuss this a bit more below).
But beware the folly of following statistics too closely. Because of this large fall now, the economy may look statistically better in a few months. The BBC’s Stephanie Flanders says ‘we may yet get a positive surprise when the first estimate for the second quarter comes out on 24 July. Indeed, the sheer scale of this decline in the first three months must make a sharp improvement more likely.’ The Guardian’s Larry Elliot believes that there may be ‘a cloud around an economic silver lining.‘ He’s not particularly specific though.
Regardless, things aren’t great in the UK and it doesn’t look like they’re getting better any time soon. So what does this mean? Read the rest of this entry »