Stumbling growth?

The government has drawn attention to the slowing German economy, recession ridden Italy, and the lack of upwards momentum in the French economy. Japan has also now suffered two more quarters of declines in output and incomes, so is back in recession. None of this helps the UK recovery, as that means bad news from some of our export markets.

I have been asked if the world is about to move back into recession. I think that unlikely. The US economy is still working well, with a large boost to output from shale gas and oil, a boost to industrial output from cheap energy, and leadership in internet and communications technologies. India is improving under the leadership of Mr Modi, and China is still growing quickly by world standards despite all the talk of the end of the Chinese growth miracle, and some slowing of the rate.

When I asked the Prime Minister yesterday about the need for us to pursue more plentiful supplies of cheaper energy to relieve the pressure on our industry, he confirmed that the government is keen to get on with finding and extracting the shale gas that is thought to lie under the surface in several parts of the UK.

He also expressed the view that monetary experiments in the UK and US had helped fuel the recoveries, and that the European Central Bank needed to do more to help Euroland. Without new policy initiatives in the Euro area, and without further stimulus in Japan the world economy will slow a bit, but will still be growing.

It seems likely that Japan will cancel or delay the proposed additional tax rise, and is now embarking on additional monetary stimulus. Mr Abe is determined to see growth return as soon as possible.


  1. Steve Cox
    November 18, 2014

    John, I’d like to bring your attention to an interesting article in The Economist a few years ago entitled “Whose Lost Decade?”:

    The ‘lost decade(s)’ soundbite has become so widely and thoughtlessly used that it’s now just a lazy way of making a doubtful point. As you will see from the article, in the first decade of this century GDP per head in Japan actually grew faster than it did in either the US or the Eurozone. So much for that lost decade! True that overall Japanese GDP growth stagnated but that was entirely driven by demographic changes. All those lazy (and often wild-haired and left wing) commentators and economists trying to make doubtful points link the lost decade myth to deflation, so we are now told unequivocally that falling prices are an economic disaster that will lead to our own lost decade. These same swivel-eyed types even go so far as to tell us that the current declining oil price is a bad thing as it will fuel the fires of deflation and hasten in the lost decade. It will be interesting to see in ten years or so from now if Mr Abe gets his way how the second decade of this century in Japan compares with the first one, which was anything but lost.

    1. Mondeo Man
      November 18, 2014

      Japan also coped with horrific natural disasters which I don’t think Britain would have managed nearly so well.

      1. ft
        November 18, 2014

        Iceland have done alright – perhaps defaulting is the way forward

    2. rick hamilton
      November 19, 2014

      Having been in Japan for most of that ‘lost’ decade I can assure you that deflation was welcomed by the hard-pressed taxpayer even if salaries didn’t go up. Who wouldn’t want falling prices in the shops? It was partly a result of the strong Yen and cheap products from China. The Economist tells us ad nauseam that deflation is bad because consumers defer spending – knowing that prices will come down later – but that only applies to big ticket items, not daily essentials. Companies have to sharpen up their game when prices are falling and the Japanese are past masters at doing so. After all exporters have been living with a rising currency for decades.
      ( In 1974 GBP was JPY740. It is now JPY180. )

      We all know what politicians are trying to do – inflate away massive national debts (caused by their own lack of discipline and pork-barrel policies) by debauching the currency, creating billions out of nowhere. No wonder ordinary people in Japan are buying gold bars. Inflation used to be a terrible thing to be stamped out at all costs but is now supposed to be the answer to all our problems. Savers and retirees on fixed incomes will be impoverished while borrowers spend before prices go up again.

      Most Japanese are very careful with money, do not splurge on credit cards or take out loans they cannot pay back, in fact retail lenders will not allow it and real estate lenders often require a relative as guarantor. But when it comes to big business or government they seem to lose the plot entirely. I suppose all the trillions and quadrillions of Yen just become too big to understand and what the hell, it will all become somebody else’s problem in the end.

      Thankfully most of their national debt is held by Japanese investors so they can always clear it by impoverishing their own people. You know, the ones who voted them into power !

    3. waramess
      November 19, 2014

      I suppose that with statistics you can prove anything you like so long as you control them.

      Japanese government spending of borrowed and of newly created money will figure heavily in the Japanese GDP figures.

      What, I wonder, does that tell us?

  2. Mark B
    November 18, 2014

    Good morning.

    . . . the government is keen to get on with finding and extracting the shale gas that is thought to lie under the surface in several parts of the UK.

    For us to extract ‘our’ own energy resources, we need the permission of the Commission. Further, thanks to the Climate Change Act, we are outlawing such fossil fuels. So, unless you are going to give licences to extract shale gas on the understanding that such gas would then be exported to pay off our growing debt, I’d doubt you will get much luck from that quarter.

    . . . the European Central Bank needed to do more to help Euroland.

    Only if Germany will allow the printing of money, which they won’t.

    1. Hope
      November 19, 2014

      Well said. The EU is strangling the economy even though the UK is not in the Euro. It now wants control over our finance industry. Exactly where is the business that we are allowed, by the EU, to use to help our prosperity?

    2. petermartin2001
      November 19, 2014

      Germany has always claimed to be against ‘money printing’ and /or large amounts of government borrowing. This is a straight untruth. The German National Debt is around $3 trillion which is pretty much the same on a per capita basis as the UK’s.

      This may surprise many who would expect that their history as a large net exporter would have enabled them to “pay off ” the debt. It obviously doesn’t work like that at all. Prior to the introduction of the Euro, the German central bank, the Bundesbank, did everything possible, including printing lots of currency, to ‘debase’ the DM and keep it cheap on the exchange markets.

      There is no mystery to running an export surplus. It just needs Government and their supposedly ‘independent’ Central Bank to act to artificially lower the value of a country’s currency.

  3. petermartin2001
    November 18, 2014

    You’re right that the world itself will not be in recession, but, unless something changes, and soon, Euroland will be. Maybe it already is or as close to recession/depression as makes no practical difference. There’s going to be no real growth there and the near bankruptcy of many EZ economies will mean they just won’t be able to afford to buy imports in the past. Germany, as the biggest exporter, is heading for a fall. IMO.

    The fundamental problem of the Eurozone is marrying up the economies of the big exporters: Germany, Austria, the Netherlands and others who have so far done reasonably well from the Euro, with the rest who have fared disastrously. It simply isn’t possible for the net importers to meet the EZ rules and still be good customers of the exporters.

    When a net importer and a net exporter trade together using their own and, prior to the Euro, different currencies, there is always an inevitable imbalance when it comes to the net importer being able to pay in its own currency. There is going to be a ‘glut’ of that currency on the market, which if left alone would cause the currency to depreciate. That country would then be able to afford fewer imports, its exports would look more competitive, and so its trade would naturally move into balance. Neither country wants that, so the importer issues bonds which are obligingly bought by the exporter using the excess of the importer’s currency. The importer then re-issues the money obtained from the sale of those bonds into its economy by government deficit spending. In other words, the supplier lends money to its customer to be able to continue to be a good customer. The central bank of the exporter then stores the purchased bonds and just creates, or ‘prints’, extra amounts of its own currency to satisfy the need of its internal exporting companies to be paid in that currency.

    Despite all German assertions to the contrary, the policy of the Bundesbank was never, solely, the minimisation of inflation. The Bundesbank was quite willing to ‘print’ as many DMs as was considered necessary to hold down its value to maintain the sales of German exports. An artificially lower exchange rate also translates into higher prices in German shops and so contributes to a higher level of inflation than may be the case otherwise.

    This kind of arrangement can continue indefinitely. Of course, if the currencies are separate, they can vary over time in value in relation to each other, but, providing that inflation rates in the two countries are approximately the same, they do not need to. In principle they could be fixed, providing the exporter and importer co-operate to equalise their monetary transfers by the necessary issuance and purchase of government securities.

    Therefore, if this arrangement can work with fixed exchange rates, it must be able to work with the same currency too. The process is simply the same one, as before, of the exporting country lending back its surplus to the importing country so that it can continue to be a good customer. As the currencies are the same there does not have to be any bonds involved, it just needs money to be lent back, but there can be a transfer via bonds if that is mutually preferred. Money and bonds are just different forms of government IOUs in any case.

    In the case of the Eurozone these would be the so-called Eurobonds which are widely being discussed, but adamantly opposed by German bankers and politicians . I fail to understand why. These are essentially the same people who were happy to lend their customers money when their currencies were different, so why do they have a problem now they are the same?

    Unless the big European exporters get over their unwillingness to recycle their Euro surpluses, as they used to before the Euro, the EZ is never going to work. It will inevitably fail and drag down the entire EU with it.

    1. waramess
      November 19, 2014

      Utter nonsense. The Euro was never the problem, the government deficits were.

      With the Euro a country needs to earn its keep and spend within its means. There will be some poor countries and some rich countries but then, that is life.

      Living well beyond their means for a protracted period of time is neither something that should be considered normal nor is expecting the resulting deficit to be subsidised by others. Short term deficits on the other hand will be easily rebalanced if spending is controlled.

      To blame the problems of Greece, for example, on the adoption of the Euro or on the Germans is to dilute the blame that should be allocated entirely to the State.

      Of course in this Keynesian, Monetarist world money printing and devaluation are viewed as useful tools but the chickens come home to roost eventually and, when they do the ordinary citizen is very much poorer.

      1. petermartin2001
        November 19, 2014


        Using the word “nonsense” is one thing, explaining why is another. It would have been a nonsense for the UK to have joined the Euro for example. This is why:

        The UK is a net importer. There is nothing wrong with that. The big net exporters need the net importers of the world. Imports have to match exports globally. $ for $. £ or £ . So Germany and China need the UK and the USA to buy their stuff if they want to be net exporters. So we are doing them a big favour ! We’ve done Germany, and ourselves, a big favour by staying out of the Euro too. It would have been a disaster had we joined.

        The Lib Dems used to think anti-Euro arguments were “nonsense” at one time too! Not any more. In private, they may well agree with your comment “the Euro was never the problem”. Not in public though. They do at least have the sense to know that nearly everyone in the UK does know that the Euro is a huge problem for the EU. Its failure is the root cause or the influx of millions of economic refugees from the EU wishing to have a better life in the UK.

    2. Hope
      November 19, 2014

      Let us hope you are correct.

  4. Gary
    November 18, 2014

    I could say I told you so, but I won’t. 2 months ago we were regaled with wall to wall stories about how we had stellar economic prospects, now we are on the brink, we are told.

    Does anyone in Westminster know what they are doing?

    One thing is sure, you cannot grow sustainably by printing money. This is theft, it is the greatest crime ever. It will never work except to enrich the financiers and their bought politician enablers. I look forward to seeing bankers and politicians being held accountable by the people, French style.

    The G20 tells us that our bank deposits are not money but paper investments in the banks to be treated as shareholders in a bust, Cyprus style. Ominous.We are headed for a massive collapse.

    I see in addition to rigging libor, rates, gold, loan insurance and everything else, the banks have been caught rigging forex. Is that why the GBP was so strong? Perhaps they are trying to prevent this? :

    ” There is no means of avoiding the
    final collapse of a boom brought
    about by credit expansion. The
    alternative is only whether the
    crisis should come sooner as the
    result of a voluntary abandonment
    of further credit expansion, or
    later as a final and total
    catastrophe of the currency
    system involved.”- Mises

    1. petermartin2001
      November 18, 2014

      “One thing is sure, you cannot grow sustainably by printing money”

      There may be limits on sustainable growth in terms of a shortage of the real resources which are necessary to maintain that growth, but a shortage of money wouldn’t be one of them.

      All modern money is either printed, or created in a computer, and there is no gold or silver involved any longer. So should the amount of money in existence be fixed or frozen in perpetuity? It wasn’t fixed when it was linked to gold ( more could be dug out of the ground ) so why fix it now?

      Maybe governments could bury pots of new money, keep the location secret, and let companies search for the money to dig it up? Governments could sell them prospecting rights? It would be a form of virtual gold mining. Silly as it sounds, that could work.

      But, might not a better approach be to pay those companies, in newly created money, to do something slightly more useful? Why would that be any more inflationary than the mining approach? Inflation is always the big problem when creating new supplies of money. That is if it is overdone. If it is underdone we have the opposite problem of deflation, recession and high unemployment.

  5. Gary
    November 18, 2014

    Fracking is a disaster

    ” 3 Billion Gallons Of Fracking
    Wastewater Pumped Into Clean
    California Aquifiers: “Errors
    Were Made” State Admits”

    Why don’t we just use coal like Germany ? We have decades of supply. Not enough money for the pals in the City?

    1. A different Simon
      November 18, 2014

      Gary ,

      An isolated incident of a totally different process does not make frac’ing a disaster .

      200 wells onshore the UK have been frac’d and plenty in Germany and elsewhere over Europe without incident .

      We already dispose of millions of barrels of formation water produced from onshore wells every year .

      If I were looking for pollution I’d start with farming and what households across the country tip down the sink and the toilet every day .

      1. Gary
        November 19, 2014

        Fracking is banned in Germany.

        And you don’t just sink 200 wells, but 1000s, each with an extremely short lifespan. Fracking is extremely capital intensive requiring a lot if funding, unlike coal, which is why the City loves it. Fracking also spurs a huge property boom, much of the profits are made flipping property. Which again, is why the City loves it.

        Coal is the cheaper, more reliable option with decades of reserves, and more environmentally sound.

        1. A different Simon
          November 19, 2014

          Germany has not banned hydraulic fracturing . They just have very restrictive rules about where it can be used .

          The economic ultimate recovery (EUR) of a horizontal lateral of a shale gas well can be several billion cubic feet of gas .
          The front loaded nature of production relieves financing costs .

          Your assumption that hydraulic fracturing spurs a huge property boom is plain wrong in countries outside the US such as the UK and Germany where oil and gas rights are nationalised .

          I hope we end up with tens of thousands of wells out of this , drilled 40 or more per pad , with multiple long horizontal laterals from the same vertical so that each pad drains 4 square miles or more .

          Will be transformational to the families of the people who get work out of this .

          Oil , gas and coal are not mutually exclusive .

    2. John Robertson
      November 18, 2014

      It wasn’t the “pals in the City” that stood behind Arthur Scargill to bring down the industry, nor do they line up with the Greens to prevent extraction. The Australians stepped in and they have also found a 26 year supply on the Scottish English boarder of coal. You will find investors lining up but whether anything happens won’t be down to the City.

    3. lojolondon
      November 18, 2014

      Fracking will save us all – just look how the Biased BBC glosses over the fact that fracking in America is bringing down the international cost of oil – We should be fracking like crazy, and still leading the world for nuclear power instead of relying on the French.

  6. Richard1
    November 18, 2014

    I thought one of the worrying things about Japan is monetary stimulus doesn’t make much difference – except of course in pushing up asset prices. Japan needs supply side reforms, an opening up of its economy and probably extensive bank restructuring. Its their business of course,but much of this could be included in international free trade deals, which are the biggest possible contribution govts around the world can make to boost growth and eliminate poverty. Free trade is far better than aid and subsidy.

    The energy point is key. The govt need to lift both direct and indirect blocks to fracking. Its no good Mr Cameron saying he wants shale gas if, as now, a shale gas driller would have to shut down if it made a tremor similar to that of a passing lorry.

    Meanwhile we see the blight of environmental leftism again in this latest attempt to block GM foods, withGreenpeace forcing the EC to fire a sensible scientist. (Why is Greenpeace so empowered? Another item for renegotiation – no more special treatment for environmental pressure groups).

  7. Lifelogic
    November 18, 2014

    If you want growth you just need far cheaper energy, no green crap, lower taxes, fewer daft regulations, no climate change act, more people doing real jobs, fewer lawyers, better schools and roads, bureaucrats, HR experts and tax planners, no HS2 lunancy, no counter productive wars, sensible employment laws, far fewer payments to augment the feckless, less enforced equality drivel, more confidence and sensible but selective immigration.

    Virtually the opposite of the Coalition policies in fact but Labour would clearly be even worse still.

    Look at London with the non dom tax regime (for some) extend similar low taxes to all and fire the 50% of the state sector that just gets in the way.

  8. Timaction
    November 18, 2014

    The Prime Minister promised yesterday to borrow £650 million to give it away to ,,3rd world Countries to tackle unproven climate change. This will help tackle immigration………You,re still listening to his pearls of wisdom and promises. The rest of us can’t wait until he,s gone.

    1. Hope
      November 19, 2014

      Somerset looks like it will flood again and Cameron is giving away our taxes abroad to prevent, yes you guessed it, flooding! This is the man who promised money for Somerset which turned out to be loans. JR, don’ worry about Miliband, Cameron is a liability for the future of your party.

  9. oldtimer
    November 18, 2014

    Oil at c$75 a barrel will help matters along – unless you are Russian. In my view the UK is still something of a fool`s paradise. It has a huge and unresolved state deficit/debt problem, an inefficient tax code, a still out of control level of welfare spending and too much political thought and action is driven by expensive group think. None of the main parties has produced an answer, nor does it look likely that they have the imagination, let alone the will, to produce one.

    1. Mitchel
      November 19, 2014

      If sustained,the sharp fall in the oil price will undoubtedly affect Russia but,in the meantime,is Cameron aware that ,far from being in recession,Russia’s third quarter GDP actually showed growth of 0.7%?The counter sanctions on the West are clearly having greater effect than the West’s sanctions on Russia.If Cameron wants to bash Russia,fine,but he should really get up to date facts rather than rely on a stale script from John Kerry or Catherine Ashton.

  10. Iain Moore
    November 18, 2014

    “When I asked the Prime Minister yesterday about the need for us to pursue more plentiful supplies of cheaper energy”

    Meanwhile Cameron gives away £650 million SIX HUNDRED AND FIFTY MILLION, 120,000 peoples national income tax, to the UN for his green madness.

    1. Lifelogic
      November 18, 2014

      Perhaps if they stopped promoting expensive fake green energy with idiotic tax payer subsidies – it might be a good start.

      But Cameron prefers the Ed Davey energy insanity to Owen Patterson types.

    2. Excalibur
      November 18, 2014

      The newspaper report stated that CMD intends to give away quote at least unquote 650 million pounds, Iain.

    3. Hope
      November 19, 2014

      Do not forget that a sixth of overseas aid is spent by the EU, neither Cameron nor the UK get say where our taxes are spent. He really is an Oxbridge PPE graduate. This course needs to be scrapped to help our country’s economy.

  11. stred
    November 18, 2014

    Earlier this year, the Treasury stasted to use the new European method of adding GDP, including drug dealing, horizontal sex working, and charities. As we are particularly productive in these areas, this allowed the EU to revise the figures back 20 years (?) and send us a very large bill, which Mr Cameron said he would not pay and then agreed to after claiming that it had halved by including the rebate. In spring next year this blip will not occur in the GDP stats and he must know this. Growth will not be as healthy, unless we work particularly hard in these areas, and just before the election. It could have been a plot in Yes Minister.

  12. Bert Young
    November 18, 2014

    The ECB does what Germany allows it to do and as long as they cling to their surplus , the ECB are powerless to go-ahead with the QE that would be a respite . This attitude is what lies behind the recent voice in Germany citing the need for the UK to remain in the EU ; they know full well that the consequences of our withdrawal would fall back on their coffers making the Euro vulnerable and their exports highly expensive . The Eurozone badly needs a “lift off” incentive to bolster consumer demand ; without this its stagnation will continue . Of course , if the Euro ceased to exist , countries would be able to exploit forms of devaluation as happened in the old days .
    International markets are far more susceptible and exposed nowadays emphasising the need for a concerted approach ; trade barriers of all sorts should be discarded . The political motives that attempt to create harmony and unity at the expense of trade and enterprise are no longer acceptable – the world is a smaller and much more interdependent place . Africa typifies the need for development crying out for controlled investment . The resources of the IMF are not adequate and effective enough to lead the degree of change required , so , world leaders have to recognise the need to co-ordinate a solution and put the skills together to supervise and control it .

  13. English Pensioner
    November 18, 2014

    The EU appears to be driving itself into a recession due to the demands of the Euro which are incompatible with the diverse economies of the countries involved.
    The rest of the world doesn’t appear to be doing to badly which gives us very good reasons for getting out of the EU (with all its add-on costs) and putting far more emphasis on our world-wide trade. Sticking to a failing economy and claiming that it is our future is simply dragging this country down.

  14. Tony E
    November 18, 2014

    Monetary stimulus is a short term fix, not designed to help an economy recover productivity, but to reduce the problems of poor debt/asset ratios and to delay a proper correction of prices. It’s either blowing a bubble, or preventing it from deflating. It’s not about real or sustainable growth, it’s kicking the can down the road to a more convenient moment, or to make it someone else’s problem.

    The US and UK ‘experiment’ has been an utter failure, though I admit that with the US trashing its own currency, and the reserve nature of the dollar, we would have faced difficulties in our export markets if we had allowed Sterling to become a safe haven with reasonable interest rates and a rising value.

    Its about time politicians started talking about the structural issues of competing ‘money’ and the lack of a proper store of ‘value’ for the working population as opposed to a constantly devaluing means of exchange. Our current situation is the inevitable end of Nixon’s decision of Aug 1971 and Greenspan’s monetary indiscipline.

  15. Mike Wilson
    November 18, 2014

    Mr. Redwood, if shale gas is under the land between, say, Mathewsgreen Road and the A329M – extending back under the built up areas the other side of Mathewsgreen Road and Toutley Road – do you seriously think that local people will ever allow it to be extracted?

    Shale gas will never be extracted in this country. Too many NIMBYs. Please stop pretending it will be. It’s the same as endlessly mentioning an EU Referendum – the negotiation terms of which are TOP SECRET!

    1. A different Simon
      November 18, 2014

      Mike Wilson ,

      I thought it was a mistake to hold the 14th Onshore Licensing round before the G.E. given Labour’s fence sitting but it sounds like the response exceeded expectations .

      Saudi-Arabia is looking to export finished chemical products in future rather than raw materials .

      Around 2018 a whole load of U.S. chemical plants will open up to consume the surplus ethane which is being produced as a bi-product from shale gas wells .

      Even when ethane is available to export it is not so easy to liquify , transport and store .

      New domestic hydrocarbon production , particularly wet gas , is essential if Europe is to retain entire industries . If they go , their suppliers and customers will follow them .

      Nimbys desire to live in a massive open air museum cannot be allowed to override peoples need for homes and places of work .

  16. Tad Davison
    November 18, 2014

    The most surprising thing about the poor growth in the EU, is that some people are surprised!

    I wonder if these are the same people who constantly advocate more of the very stuff that made them ill in the first place?

    I see from reading back to the very late comments from several days ago, that our Dutch friend suggested to me that the UK might find we wouldn’t do too well were we to leave the EU. Perhaps he would be good enough today, to give his take on the on-going disaster that is the European Union, and tell us how it could possibly be any worse.


    1. Mondeo Man
      November 18, 2014

      Our Dutch friend seems to know Britain better than we do, Tad.

    2. Hope
      November 19, 2014

      We could be in the Euro and broke if you believed fools like Clarke, Clegg, Major and Heseltine.

  17. Lifelogic
    November 18, 2014

    The UK needs some real competitive advantages. Expensive religious energy and nearly all the policies of over taxation, huge over the top regulation (both from the EU and this dreadful coalition), a bloated state, poor schools and health care, a duff, slow and expensive legal system are huge competitive disadvantages.

    The prospect of worse to come after May 2015 – all thanks to Cameron’s duff compass does not help confidence either.

  18. fedupsouthener
    November 18, 2014

    I hope that as well as trying to find shale gas he STOPS subsidies to onshore wind. The cost of renewable energy is crippling not only the UK but Europe too. We need cheap reliable forms of power not intermittent power that is excessively expensive for both business and the domestic market. Households are feeling the pinch still but the relentless erection of wind farms especially in Scotland are killing off the rural areas and making the cost of energy sky high for consumers. We have enough wind already and it is time to invest in something that works. Paying to subsidise each job in the wind industry over £100,000 is complete madness and not any way to get an economy going. We are paying wind farm operators insane amounts of money just to turn off their turbines when there is too much wind and then when there is not enough wind we may find outselves having to pay more money for private companies to run DIESEL generators. We now know that wind farms do not have any effect on CO2 emissions so it is time to stop building them and get back to sanity.

    1. A different Simon
      November 18, 2014

      Onshore wind is a highly visible way of reminding the little people on a daily basis that the establishment are their masters .

      That is why all the NGO’s , non-profits , quangos love them .

      Can you imagine the outcry from the RSPB if oil and gas wells chopped up birds like their beloved wind turbines ?

      It’s about power alright , just not the electrical kind .

  19. margaret brandreth-j
    November 18, 2014

    SKY News were also talking about a threat of a global recession and we certainly do not want our trade opportunities to lessen.

    November 18, 2014

    England has little land to recover from just one major fracking surface-chemical spillage or subsurface aquifer poisoning . Companies are too tiny to compensate residents even in monetary terms.

    The success of a perfect fracking company is dependent on energy prices well above current world levels and in practical terms on an ongoing success in a continuity of drill holes. Unlikely.
    Time to put the fracking idea on the backburner and rejoice we are not landlinked to countries engaged in such foolhardy industry.

    It would be nice to think the US is having a recovery albeit on the back of massive borrowing. Economists there pointed forcefully a few years ago that the US Housing Market would be the bellwether. It has been patchy. And generally failed, as housing stocks and lacklustre speculative ventures by realtor companies indicate. They found the building workers required for development had been so ruined by the recession they were no longer in situ or even within the industry anymore. The US recession is very deep. As is ours.
    In economic analysis we are not looking at real people and seeing exactly what they are doing and how they are living. This blindness is an occupational hazard of governments who rely on statistics. It is one reason they fall often with a fixed frown on their heads.

    1. A different Simon
      November 18, 2014

      That is defeatist .

      The UK has a long history of onshore E&P and treatment of disposal of produced water and mining waste .

      Operators are required to have liability insurance .

      If extraction is uneconomic in the UK it won’t happen and investors will lose money .

      Ineos are taking UK onshore more seriously than Total who have farmed in to Igas/Dart’s acreage and Centrica which has farmed in to Cuadrilla’s acreage .

      Ineos absolutely need a domestic source of ethane and natural gas liquids . BASF have already told Germany that any new investment is going to be in the US rather than Europe .

      Why should surface leaks from a shale gas site be any worse than leaks from any other industrial site or storage facility ?

      If the UK remains as risk averse as you suggest then it will have to watch much of it’s industry depart and it’s suppliers and customer will follow .

    November 18, 2014

    This chart does not say it all, alone. Very similar charts of the company’s peers say it all about the “recovery” of the US economy.
    Mr Carney ( BoE ) originally indicated he would implement certain changes when the UK unemployment rate fell to 7% . He did not and said why. It is now 6%, and things are unchanged. The nature of the jobs acquired and by whom is very important. A brain surgeon employed sticking the beaks on rubber ducks may keep him busy, increase profits of the duck company and beat foreign competition of duck production into the ground. But it is not sustainable.

    1. Mondeo Man
      November 18, 2014

      Brings new meaning to “I’ve been to see the quack.”

  22. Stephen Berry
    November 18, 2014

    There is another interpretation to all this. By hindering the natural economic adjustments to be made during a recession, the stimulus packages in the UK and US may in fact, have slowed the recovery. Remember that the recovery in the UK was initially awfully slow and halting.

    In Japan, they seem to have been following all the typical Keynesian recipes too – but on steroids. So, I expect their recovery to be even more fraught with problems. The fact that, like Germany, they have closed down all their nuclear power stations and face an increased bill for imported fossil fuels can’t be helping either.

    Behind the recent Cassandra pronouncements is an obvious fear. Many countries around the world have ‘dealt’ with the last recession by increasing government debt massively. I believe that Japan is number one here with debt levels heading for 250 per cent of GDP. If you add their ageing population and a low birth rate, it’s not difficult to see trouble looming. Expect then to hear totally unjustified scare stories about deflation. After all, governments desperately need inflation to make these debts go away

  23. Andyvan
    November 18, 2014

    Really? The economic figures in the US are even more manipulated than here and should they reflect reality in any way would cause a collapse in confidence. The shale gas bonanza is dying on it’s feet with the catastrophic depletion rates, low oil prices/ total lack of profit and difficulty of raising new finance.
    Given the success(!) of the European Central banks policies so far I’m not sure Euroland can take much more help from them.
    Japan’s previous stimulus has produced two decades of total stagnation and bankruptcy in all but name. In what universe will more of the same change anything?
    What is actually needed is a return to sound money and a world where governments cannot borrow unlimited sums to keep the system from crashing. A world where banksters, politicians, war criminals and thugs in uniforms have to account for their actions and suffer consequences instead of passing them on to their brain washed tax cattle.
    Merely regurgitating government statistics (lies) and expecting us to believe everything is OK and our leaders will look after us isn’t good enough especially when it is those same people that got us into the current disasters.

    1. ft
      November 18, 2014

      Swiss are having a national referendum on whether to return to the gold standard.

    2. waramess
      November 19, 2014

      Politicians and economists these days have forgotten what sound money means and, even if they did, it would interfere far too much with their current policies to have to admit to it

  24. waramess
    November 18, 2014

    Really? Well that is good news, isn’t it?

    I thought that the constant inflation of the money supply was transfering wealth from the poor to the rich and that would gradually reduce the governments tax take. How silly.

    I also thought that the Japanese monetary expansion was so excessive that not only had it transferred all the savings of the Japanese people to the state but was also now progressively reducing the effectiveness of the private sector. Silly me.

    I could see the UK economy floating on a huge bubble of house prices brought about by a government guarantee to the banks and low interest rates. How very very silly.

    And even more silly than all of this is the fact that I give absolutely no credence to anything the Prime Minister or his weasle pal of a chancellor might say

    1. Lifelogic
      November 18, 2014

      Does anyone sensible believe a word that Dave and George say?

      Dave 299+ tax increased said he was a low tax Tory by instinct. George even promised £1M IHT thresholds about 6 years ago.

  25. BobE
    November 18, 2014

    Its brilliant to hear the labour party panicking about immigration and making lots of “We will curtail it and control benefits promising” UKIP have done well in putting the wind up all of the Westminster elite parties. “Watch em scrabble boys” Brilliant stuff. 🙂

  26. acorn
    November 18, 2014

    Japan’s problem is the government is not spending enough, the deficit is too small; Abe has been reducing it. The deficit is at 7.6% and dropping, too low for the Japanese economy in its current state. That state is households wanting to save and not spend.

    It is the private sector that dictates the requirement for government deficit spending in a sovereign fiat currency economy. If the private sector lacks confidence in its future income, it will start saving big time. Inorder to maintain the production capacity of the economy, the government has to spend what the private sector isn’t spending. Austerity, is the exact opposite of what the Japanese and UK economy need.

    QE is supposed to work by forcing pension and insurance funds to give up their safe, low risk, 3 – 5% interest on Gilts, and go and invest in corporates. Thus raising share prices and making it easier for these corporates to borrow money from banks. They are supposed to invest in “supply side” capacity; creating more and cheaper products; some of which, hopefully, will be exported, mitigating the UK’s rather large net import bill.

    This is where we hit the classic Conservative, laissez faire, neo-liberal economic fallacy. The increased “supply side” does not generate increased “demand side” spending. It is the other way around. The Conservatives, have never been able to grasp this reality. Hence, the Uk’s emergence from the great recession, is three years later than it would have been under the previous administration.

    Thankfully, we are not one of the Eurozone States. They all have to use a foreign currency they can’t spend (issue) into existence. Germany is quids in. It can export loads of stuff without having to worry about its currency inflating. It doesn’t have to worry about buying up the currency of the countries that import its stuff, to maintain its export volume to those importing countries.

    BTW. Most days of the week, energy prices are cheaper in the EU than they are in the UK. Another 6 – 8 Gigawatts of HVDC interconnections with the EU, would do nicely. Meanwhile JR, reducing the UK’s ridiculously high Business Rates would yield a much greater dividend for UK plc.

  27. Iain Gill
    November 18, 2014

    national debt keeps going up. we throw money away on nonsense like aid to richer countries than we are. it will go pop at some point.

  28. fedupsouthener
    November 19, 2014

    I thought this article from the Telegraph was interesting.

    We need to stop the green crap and get on with being an economically competitive force in the world. No real movement away from the policies of Labour in five years. Let’s stop the talk and get on with the job. For goodness sake, stop listening to the likes of FOE, WWF etc. They have too much say in what goes on in this country.

  29. Lindsay McDougall
    November 19, 2014

    Japan in particular must get its policy right, avoiding the trap of debt and deflation. It should steadily reduce its fiscal deficit while keeping monetary policy loose. If only Italy were in a position to do the same.

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