UK Economy Bounces Back

The pound is changing at €1.21 now. I'm wondering how long to hold out for it to go even higher (before it maybe crashes?). I'm guessing the euro is suffering from low growth in its user nations? Time to order some more euros for foreign trips I think.

Human ill health is surely good news for doctors and drug providers just as crime is good news for policemen, QCs and judges! Not sure that parties are good news for partygoers though.

No Cunco I haven't shifted ground at all.

I thought the stats had already been produced which showed that the economy dipped into recession in 2012. If they weren't, I'll look for them and post them.

By "changing subject" I was getting back to the OP. Firstly, I pointed out that the current growth is Covid-related. Secondly, I was pointing out that a growing GDP is not a sign that the economy is "bouncing back", which is what you claimed in your OP.

Looking back over this 'wrangle', Cunco I see it started with someone else asserting that Labour had left the economy in a mess post 2008. My response was that the economy had started growing again be fore the 2010 election and it was the tories who took us into 'depression' (wrong word, I admit, but 'recession' fits). I don't see how you can look at the annual growth figures you linked to and tell me with a straight face that that was an economy that was growing... My main thesis is that the tories, by implementing austerity measures, caused growth to actually falter and it took several years to recover.

It all boils down really to an argument about which party can best manage the economy. The tory record is not particularly good.

We could talk about the idiocy of 'austerity' if you like?

I have had enough. I have produced annual and quarterly figures to demonstrate my point. These have been challenged but no figures have been produced to disprove my figures.

Nobody is arguing that the economy was strong after the Credit Crunch. It was weak after a massive hit which Brown and Darling in the UK and, impressively, Chairman of the Fed in the US and others managed with a steady hand. I have no interest in bulling up the government after the 2010 election but my data (so far the only data) does not show there was a recession.

Now, instead of providing the data, you shift the ground. Of course, GDP is not the only indicator of success or failure but it is an important one and, more to the point, it was the one were were addressing.

In any case, GDP isn't the only economic success indicator. As I posted above, the current increase is mainly due to the increase in spending on Covid-related items anyway. I doubt if most people really understand what GDP is.

Since 2010, the mean income has gone down in real terms when inflation is taken into account and inequality has widened. This could have been controlled with taxation, but the Conservative government chose not to. Most people have been shielded from the worst effects by low interest rates, but even that is about to change. Not surprisingly, the poorest and most vulnerable will be the ones who will suffer most because they have the least they can use to make savings.

And the unemployment figures, Cunco?

(P.S I only said 'dip' to keep you happy. I was looking at the year on year figures you linked to. )

You should know where my data came from because I posted the link above.

I asked you to provide a link to ONS quarterly data before and so far you have declined to do so.

My data is clearly very different from yours, perhaps because of subsequent revisions but I cannot tell unless you show me the link to your data.

If your data is superior to mine, I will accept what you say. More to the point, I will see why this wrangling has persisted so long and end it.

My data comes from the ONS.

The ONS said the fall was driven by the biggest decline in construction output for three years, while the manufacturing sector failed to return to growth.

I don't know what data you're looking at, but it doesn't appear to be the same as mine.

But the UK was officially in recession at the beginning of 2012!!! GDP dropped 0.2% in the first quarter following a similar decline.

That was after the Conservatives came to power and had started their austerity policies.

Even in the quarters before January - March 2012, revised figures showed that the economy had stalled (at best) and, most likely, had declined.

A fall in GDP is negative growth. If you don't believe me, this is from Andy Haldane when at the Bank of England: 'If GDP falls from one quarter to the next then growth is negative.'

The data shows that growth bobbed up and down and was very marginally negative a couple of times after 2010 but not in successive quarters. This contrasts with the recession of 2009 when quarterly growth was from Q1 +0.6%, -0.5%, -1.5% and -2.0%.

The data does show that GDP declined for two successive quarters. There doesn't have to be "negative growth".

Are you winding me up?

My definition of a recession is the same as Growstuff's definition which MaizieD also agreed. Growstuff said: 'the accepted definition of recession is a fall in GDP for two successive quarters, ..' I agree. Where there was a disagreement was whether there was a recession following the 2010 election. Under this definition, there was not, as shown above.

Mention of a depression is a red herring. A definition of a depression is 'a long and severe recession in an economy or market.' There was a deep recession in 2008-9 and in 2020 but, as far as I know, it has not been described as a depression.

Sorry but you’re confusing a depression and a recession.

I am not confused but I am getting tired of this confusion. So let us be clear:

A recession is normally defined as a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

The election of 2010 was in May when the Labour Party lost power with 258 seats, against 307 for Conservatives and 57 for Liberal Democrats.

According to Statista, Quarterly GDP from Q3 2010 was +0.7%, +0.1%,+0.5%,+0.1%,+0.3%,+0.1%,+0.7%,-0.1%,+1.2%,-0.2%,+0.5%,+0.7%,+0.8% and+0.5% to Q4 2013.

www.statista.com/statistics/970941/quarterly-gdp-growth-uk/

So, growth was unsurprisingly anaemic over this period but on these figures, there was no recession. In 2008-9, there were 5 quarters when growth was negative before marginal growth resumed in Q3 and Q4 of 2009. In the first 2 quarters of 2010, growth was +0.7% and +1.1% as recovery from the deep recession continued. A bounce after a recession is not surprising and indeed it happened in 2021. We probably all agree that, after the bounce, further growth will be harder to acheive.

Growstuff is right, the generally understood definition of a recession is when growth declines for a period of 2 ore more quarters. Which is just what the ONS data shows.

It is also linked to a period of rising unemployment, which the data on this page also shows increasing for the period 2008 - 2011, only slowly recovering to pre 2008 levels by 2014

www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgsx/lms

I think you're confusing a recession with a depression.

Growstuff: My Council says its budget is funded by a combination of business rates, central government grants and Council Tax.

I know the definition of recession. The chart of annual GDP (link provided above) shows a dip in growth in the period under discussion, not a recession. I pointed this out to MaizieD who had called it a recession but subsequently changed this to a 'dip'. I thought that was the end of the discussion. As I have said, it you find ONS quarterly data to show a recession occurred in the period under discussion, I will accept it.

Of course, the government and the Bank of England are talking their own agenda. I don't believe that inflation will decline to 2% in 2 years time. I thought that was obvious from my comment. The Bank of England got inflation wrong last year; and edging interest rates up marginally is, in my view, unlikely to do the trick. Inflation proved extremely difficult to reduce in the 1970's and I suspect the same may be true again. As ever, though, we cannot forecast what will happen in an uncertain world and those who try are too often found wanting. So, we will have to wait and see.

ayse, local authorities are not free to spend money other than in discharging their statutory functions. How they allocate their budget between those functions is within their control.

ayse

growstuff

No, your council tax does not go to financing your local services. Most of it goes to the Treasury, which allocates funds to your council according to a formula based on need.

Except the formula based on need gives the most to wealthier areas of the country!

I know . It's a con. Councils are not in control of their spending, which mainly goes on statutory obligations. They have become an "agency" of central government.

PS. Raising interest rates will not reduce inflation when there is an external increase in energy prices because demand is largely inelastic. All it will do is benefit those with savings at the expense of those with mortgages and other debt and those who have very little or no disposable income after paying for essentials. This is standard GCSE economics stuff.

growstuff

No, your council tax does not go to financing your local services. Most of it goes to the Treasury, which allocates funds to your council according to a formula based on need.

Except the formula based on need gives the most to wealthier areas of the country!

Has it ever occurred to you that the government and Bank of England could be saying things to suit their agenda?

No, people are not using an arbitrary definition of recession. I gave the standard definition, accepted by all economists.

No, your council tax does not go to financing your local services. Most of it goes to the Treasury, which allocates funds to your council according to a formula based on need.