The UK recovery continues – with higher public spending, not austerity

Yesterday the government published the latest quarterly figures for output and earnings to June 30th 2015.

 

The UK economy is now producing 6% more than at the peak in early 2008 before the crash. The USA is producing 10% more, the EU just 1% more and Japan has the same output as Quarter 1 2008.  The UK recovery has been a steady one since 2009. The last annual figure shows growth of 2.4% , after 2.9% for calendar 2014. GDP per head is also now a little higher than at the pre crash peak, and rose by 1.9%  comparing the second quarter of 2015 with the same quarter the previous year. Japan’s stagnant output since 2008 is partly owing to population decline.

 

The best news in the figures is the growth in incomes and real incomes.  Compensation for employees is up by 4.7% in the last twelve months (Q2 2015 over Q2 2014), and real  disposable incomes rose by 2% just between the first and second quarters of 2015.  A greater feeling of job security for many, coupled with increases in earnings, is allowing service sector expansion and more retail purchases.

 

The figures once again remind anyone interested in the reality that public spending continues to rise. Government spending is up 0.4% on the previous quarter and 1.6% over the last twelve months, in real terms. The balance of payments improved sharply in the second quarter after a weak first quarter. Exports were up, imports down, and the current account deficit narrowed from 5.2% of National Income in the first quarter to 3.6% in the second.

 

Whilst the overall money supply figures show a small contraction in money, and no growth in lending to finance a recovery, the picture is of 4% growth in money (M4) adjusted for other financial corporations as the Bank of England likes to do. Lending taking out the other financial corporations was up by 2.3%. The Bank regards this narrower measure as a closer proxy for the real economy.

 

All this points to a steady performance. There is no great inflation threat as higher wages are coming at a time when productivity is improving as well, whilst the prices of imports and commodities remain weak.

It would be good if the political debate and interviews could be based around this factual portrait of the UK economy based on the official figures. More needs to be done to boost output, real wages and productivity. High energy prices remain a big problem, but we have a good base for further advances in employment and living standards.

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72 Comments

  1. formula57
    Posted October 1, 2015 at 5:22 am | Permalink

    Perhaps you were writing without the benefit of referring to notes, but you have failed to mention the deficit!

    Good news though and very pleasing but surely it is the government’s fault if this factual portrait is missing from the political debate.

    • Lifelogic
      Posted October 1, 2015 at 10:19 am | Permalink

      Indeed the government, essentially being lefty tax borrow and waste merchants, never even try to make the correct & highly moral case for a smaller state and lower taxes. They too push the magic money tree illusion of government “investment” and government as a sort of Father Christmas figure.

      Occasionally they say they are “low tax conservatives at heart” or other dishonest banalities but then they hike taxes up yet again, increase tax complexity, cut private pension pots and thieve off landlords while pissing money away on HS2, endless pointless green grants, payments to the feckless and the likes.

      The country is crying out for a real Tory agenda of smaller government, lower taxes, real jobs and growth.

      • Lifelogic
        Posted October 1, 2015 at 10:24 am | Permalink

        Meanwhile it seems that the Libyans (being trained in the UK by the military) and later jailed for molesting women are now seeking asylum in the UK.

        Still it is all good for the legal profession’s incomes I suppose.

      • Jon
        Posted October 1, 2015 at 7:14 pm | Permalink

        Yes but maybe like Corbyn, unelectable as a result.

  2. Rita Webb (Mrs)
    Posted October 1, 2015 at 5:35 am | Permalink

    High energy costs remain a problem because your government keeps them that way. Through a regressive tax regime, the UK has the highest prices for diesel and petrol in the whole of Europe. To put things in context I was paying 70p for a litre of diesel in Poland during the Summer, in comparison to around £1.10 per litre. Apart from the unfair nature of this tax, its a big handicap on British business. Now you know why there are so many Polish lorries on the roads these days, nobody can compete with their overheads.

    • stred
      Posted October 1, 2015 at 8:27 am | Permalink

      They can fill up in Calais for 76p/litre. Is this all down to tax?

      • Rita Webb (Mrs)
        Posted October 1, 2015 at 10:29 am | Permalink

        Why should it not be ? Oil has traded at around $45 per barrel for some time now. Even “high tax and spend” countries like Sweden have cheaper fuel than ourselves.

        • libertarian
          Posted October 1, 2015 at 6:32 pm | Permalink

          Rita Webb

          You are right about fuel.

          68% of the cost of a UK litre is tax. Duty, Vat AND Vat on duty. This is the worlds HIGHEST rate

      • Peter Parsons
        Posted October 1, 2015 at 3:42 pm | Permalink

        Tax and the Euro/Sterling exchange rate. Traditionally, diesel has been treated more favourably than petrol in France from a tax perspective. They don’t pay the 58p/litre fuel duty (on which VAT is then charged) that we are subject to in the UK.

        Fuel prices excluding tax are fairly comparable in the UK to other parts of the EU, it is the tax regime which is the major differentiator.

    • alan jutson
      Posted October 1, 2015 at 8:41 am | Permalink

      Rita

      Just back (this week) from France, diesel was 108 Euro’s per litre over there.

      All cars and lorries filling up before entering the UK when we were returning, ourselves included.

      • Hefner
        Posted October 1, 2015 at 11:53 am | Permalink

        Hauliers can have a good deal of their tax on diesel reimbursed.

        Look for “Remboursement des taxes de carburant aux transports routiers” on Service-Public-Pro.fr
        That’s an official text from 7 July 2015.

      • alan jutson
        Posted October 1, 2015 at 12:30 pm | Permalink

        oops

        Should have been 1.08 Euro’s per litre.

        Petrol was 1.20 Euro’s per litre.

  3. Lifelogic
    Posted October 1, 2015 at 5:45 am | Permalink

    Government is spending too much and delivering mainly worthless dross in the way of public services. Why is this government not even attempting to reduce the bloated size of government, nor the dreadful quality of services delivered or often not delivered? The NHS is failing the public hugely, every single day and with an appalling avoidable death toll.

    • Lifelogic
      Posted October 1, 2015 at 5:46 am | Permalink

      A good illustration of how governments harm efficiency in the private sector is give by the proposed attacks on UBER the taxis app. Among the dafter suggestions are:-

      1. Operators “must provide booking confirmation details to the passenger at least five minutes prior to the journey” Uber matches passengers with the nearest riders, meaning they are picked up in, on average, three minutes.

      (So the car and passenger have to stand about for five minutes one assumes)

      2. Companies “must not show vehicles being available for immediate hire either visibly or virtually via an app” One of Uber’s key features is a map of available drivers in the area around the passenger.
      3. Operators “must offer a facility to pre-book up to seven days in advance” This option that would create major headaches for Uber, since it does not allow passengers to pre-book rides.
      4. Drivers may only work for one operator at a time Uber says many of its drivers are part-time workers whose main employer is a traditional minicab firm.
      5. There should be “controls on ridesharing in public vehicles” Uber’s chief executive Travis Kalanick has said he wants to bring the UberPool service to London, which allows several customers to share a car.
      (one might have thought they would be keen on taxi sharing for “green” reasons)

      Why not insist they have a man with a red flag in front to?

      Engineers improve the technology hugely. only for it to be held back by governments and vested interests, to the huge cost and inconvenience of the public. Black cabs have had a very good deal for a long time. It is time for them to learn how to compete or go.

      http://www.telegraph.co.uk/technology/uber/11902870/Uber-supporters-hit-out-at-damaging-London-plans-to-restrict-service.html

      • stred
        Posted October 1, 2015 at 12:42 pm | Permalink

        My bird booked a cab for early this morning to City airport. It was late because the driver went to a road with the same name in the wrong borough. He then drove off to the wrong airport. Perhaps an Uber like system would help ordinary cabs.

      • Richard1
        Posted October 1, 2015 at 5:01 pm | Permalink

        Who has come out with this garbage? It is a classic example of entrenched interest using regulation to stifle competition at the expense of the consumer. Engineering is one thing. Free markets are the essential underpinning of prosperity and liberty

    • Lifelogic
      Posted October 1, 2015 at 3:18 pm | Permalink

      Cameron’s foolish statement that he would stand down before the next election has already kicked off a long battle for his replacement.

      I read that Nicky Morgan has now said she will stand, an ex-public school lawyer who is well to the left (even of the IHT ratter Osborne) is not going to be a good choice. Osborne himself is not liked by the public at all, and will be even less liked by the time of the next election.

      Are there no sensible candidates who could win over the party?

  4. Antisthenes
    Posted October 1, 2015 at 6:59 am | Permalink

    If I had not read your article I would be ignorant of the information that you have researched and now published. I suspect that most of the general public like me are just as unaware of these important facts either being to busy or lazy or not interested or know not how to find this sort of thing out. We cannot rely much on the MSM or most politicians present one excepted to give us this type of information. Tractor stats are of course very boring to most and if used truthfully get in the way of journalists spinning a good juicy sensationalist story and politicians pushing their ideological policies. It is certainly more true of lefties and the more to the left they are the more they wish to suppress the truth as it nearly always proves them wrong in their views and opinions.

    • MikeP
      Posted October 1, 2015 at 9:05 am | Permalink

      Actually the news from ONS was covered on the BBC News website but, of course, didn’t manage to avoid the TV News Editor’s meat cleaver so items about Mark Carney and Climate Change, Putin ordering air strikes in Syria, VW emissions, and Donald Trump took precedence. Bad News always ‘trumps’ good news.

    • daveM
      Posted October 1, 2015 at 10:02 am | Permalink

      Most of the public are also unaware that the PM paid the extra £1.7 Bn EU bill that he pretended to be angry about, and I’d imagine very few are aware of new the increase in the EU budget.

      They would also have been unaware of Libyan “soldiers” claiming asylum even though they’re currently in a UK prison for theft and sexual assault. Thank God for the Daily Mail.

      • Lifelogic
        Posted October 1, 2015 at 11:04 am | Permalink

        Cameron did not pay it alas. The public and businesses paid it almost always against their will. Thus starving them of money to invest, to pay their mortgages and to improve the lot of themselves and their families.

  5. Lifelogic
    Posted October 1, 2015 at 7:24 am | Permalink

    The lack of lending, on sensible terms, to businesses by the banks is still a large problem. It adds to the general lack of confidence by borrowers, who understandably now have little trust in the banks.

    The Banks as still able to extract large margins and fees, while paying a mere pittance for any deposits. There is clearly a total lack of a competitive market in banking.

    • Richard1
      Posted October 1, 2015 at 8:35 am | Permalink

      This is clearly changing. Banks are being disintermediated left and right. Many transaction services for retail and SMEs are being captured by start up businesses, and peer to peer and non-bank lending is an emerging source of debt finance. I would say the outlook for major banks in their core busienesses which have historically generated high margins is very shaky. But this is positive for consumers & the economy and the govt should be careful not to allow vested interests – eg lobbying of the EU by established players – to stifle innovation.

      • Lifelogic
        Posted October 1, 2015 at 11:08 am | Permalink

        Lend say £100K to the bank (unsecured) get 0.1% or something similar borrow the same the week after and expect to pay Libor + 4-30%+ an arrangement fee, plus they will want very good security.

        Is this a sensible, competitive market? Especially when the customers are rather better risks than many of the banks?

        • Richard1
          Posted October 1, 2015 at 5:05 pm | Permalink

          Well the banks still have the advantage of an effective govt backstop – though its unclear how much. And they also have access to unlimited liquidity from the BoE (if thats what the BoE still does – I see it has now joined Greenpeace etc in a campaign against cheap energy). But the point you make is valid – and thats why we have crowdfunding, peer to peer lending and non-bank institutions entering the market. Those margins wont last.

    • Bob
      Posted October 1, 2015 at 8:45 am | Permalink

      @lifelogic

      “There is clearly a total lack of a competitive market in banking.”

      Why doesn’t this government tackle the problem, are they bought and paid for by the big banks?

    • Rita Webb (Mrs)
      Posted October 1, 2015 at 10:32 am | Permalink

      LL why would a businessman like yourself want to borrow at the minute? Its not as if the punters for your product/service are not strapped down with debt to be able to use them in the first place?

      • Lifelogic
        Posted October 1, 2015 at 3:22 pm | Permalink

        I might want to borrow to acquire another business, or to buy another property development/investment, or to build a new factory, or just to expand the existing businesses.

  6. Ian wragg
    Posted October 1, 2015 at 7:34 am | Permalink

    John growth has been achieved solely by government borrowing. We have supposed growth and more employment but tax receipts are down and welfare up. This is neither clever or sustainable.
    With another recession on the horizon we are totally unprepared to deal with it given the enormous debt and failure to eliminate the deficit.
    I see the EU has the begging bowl out again. What’s the betting Gideon pays up without a peep.

    • Chris
      Posted October 1, 2015 at 10:47 am | Permalink

      I agree and I strongly feel that a “recovery” based on debt and consumption has foundations based on sand, making us extremely vulnerable. It is not a smart way to look after the finances of this country.

      • Chris
        Posted October 1, 2015 at 10:49 am | Permalink

        Re above, please amend “consumption” to consumer spending.

    • Gary
      Posted October 2, 2015 at 7:16 am | Permalink

      quite right Ian. govt borrowing goes straight to “GDP”. For the real economic growth loom to the commodity companies, even the biggest are going to the wall. Look at the price of oil. All countries now seem to be living on govt borrowing.

  7. nigel
    Posted October 1, 2015 at 7:35 am | Permalink

    JR: You tell us about the current account deficit, but what about the national debt?

    Reply This week it is fashionable to leave that out. I have written often about debt and deficit. The figures published this week by HMG are about other things.

  8. Richard1
    Posted October 1, 2015 at 7:47 am | Permalink

    Yes this govt and its predecessor have been positive for the UK economy. Those who assert its all a disaster and there is no difference between the Conservatives and Corbyn and his terrorist-supporting henchman McDonnell should pause for thought and examine the actual facts.

    What is amazing about these undoubted facts is the brazenness of leftist economists and commentators for whom all this actual evidence which has proved them so wrong hasn’t changed their views one iota.

  9. Mike Stallard
    Posted October 1, 2015 at 7:50 am | Permalink

    It was this very blog that first noticed that the current Chancellor was, in fact, paying out more to Welfare than was thought and that austerity was a chimera. Now it is even more true. The figures speak for themselves: so do the deficit and the National Debt, which is three times, or thereabouts, what Mr Brown left all those years ago. Please God, we will not have another sudden emergency (2008).

    The Unions do not mean that same thing as you do by the word “Austerity”. The old working men’s unions have long gone now and they largely consist of white collar workers and people who are paid for by the government.

    These people are being cut back hard – which is why I voted for the Conservatives myself – and for them, and their families, there is a very real danger of losing their livelihood, their mortgages, their holidays, their second car. That is what the appeal of the word “Austerity” is for the Unions and for them.

    I think you and they (who now are very jubilant with the election of Mr Corbyn) are talking about two very different things.

    • Lifelogic
      Posted October 1, 2015 at 4:57 pm | Permalink

      Well they are hardly being cut back hard they still earn with pension included about 50% more than the private sector. Many do very little of any use anyway though many of course do important jobs usually under absurd and incompetent management.

      Release the former so they get a more productive and satisfying job.

  10. oldtimer
    Posted October 1, 2015 at 7:51 am | Permalink

    Your call for the political debate and interviews to be based on a factual portrait of the UK economy will, of course, fall on deaf ears. Facts are never allowed to get in the way of political spin.

  11. Posted October 1, 2015 at 7:56 am | Permalink

    “The UK economy is now producing 6% more than at the peak in early 2008”

    But the gdp per capita (and that’s what matters to most voters) is still less than it was then.

    There’s not a lot of point quoting official figures, and telling them there’s no austerity when the experience of many people was that they had a well paying job before the GFC but they either don’t have a job at all now or , more likely, they have a poorly paying job.

    The evidence from the sectoral balances is that there is a net de-saving happening. In other words the economy is losing money. The government deficit is not enough to cover the import bill and so that is being made up from savings.

    That’s a bad sign. The chances of an economic crash in the next 12 months are high.

    Reply GDP per capita is now higher than the 2008 peak as well.

    • stred
      Posted October 1, 2015 at 8:33 am | Permalink

      What population figure is being used by Peter and JR and are the growth figures equalised for the addition of the drug and prostitution trade?

      • Posted October 1, 2015 at 12:32 pm | Permalink

        I haven’t done the calculation from first principles. I was just relying on the data shown in this block graph.
        http://www.tradingeconomics.com/united-kingdom/gdp-per-capita

        However, it’s not from an official source and it’s possible that JR has access to better data than myself on this point.

        reply. I was quoting the latest official UK figures. Your figures are in dollars so the currency affect will probably account for the difference.

    • miami.mode
      Posted October 1, 2015 at 9:58 am | Permalink

      peter

      Notwithstanding the general good news it was the figures for 6% higher production and ‘a little higher’ for GDP that jumped out to me.

      JR’s reply to you is correct but of course government debt has probably doubled in that time and generally it must reflect badly on the changes brought about by immigration and the current jobs available.

      Mr Micawber might have had something useful to say on this.

      Reply Government debt has not doubled since 2010!

      • Chris
        Posted October 1, 2015 at 11:00 am | Permalink

        Reply to JR:

        Apparently debt has risen from just under £1 trillion in April 2010 to about £1.5 trillion in February 2015. As a proportion of GDP, it has risen from just over 60% to 80%. If you measure debt for the six year period from 2008/9 year to February 2015, the debt indeed has doubled.

        A rise of £0.5 trillion in 5 years (when Osborne had promised to reduce the debt and to bring the deficit down) is hugely worrying and damaging. It is nothing to be proud of.

        Reply I am not proud of it, and have made various suggestions to get the deficit down more quickly. I am glad you now accept that under Mr O the debt has increased by 50%, not 100%.

        • Chris
          Posted October 1, 2015 at 12:02 pm | Permalink

          Reply to JR: I have never claimed that it has doubled. You confuse me with MM above.

        • Posted October 1, 2015 at 12:26 pm | Permalink

          The debt is not well understood in the UK. For example, how many people understand that QE is effectively debt cancellation? The UK government is paying interest to itself on the £375 billion of government debt owned by the Bank of England. That is about a quarter of all UK government debt. Since the Bank of England is unlikely to ever sell those bonds the ratio of government debt to GDP in the UK is more like 70%, rather than the often claimed 90%.

          That’s the technical position. Theoretically all debt would disappear if the government used QE to buy back all the bonds owned by the private sector.

          So when we understand that we understand that the debt is not a problem in the sense that a car or house loan might be to us. It’s just a potential inflation risk for at some point in the future.

        • miami.mode
          Posted October 1, 2015 at 2:35 pm | Permalink

          Thanks for your response Chris. I wasn’t going to bother, but my point really was that in his second paragraph JR referred to 2008 which we all know was G Brown’s government with his incontinent spending. I wasn’t blaming the Coalition because George Osborne was obviously presented with a Herculean task.

    • Lifelogic
      Posted October 1, 2015 at 3:29 pm | Permalink

      To Reply “GDP per capita is now higher than the 2008 peak as well” well not in purchasing power parity terms, plus we have far higher taxes and regulation too.

      All those seven years of engineering developments and technical innovations yet all these Tories can deliver is negative growth in living standards! It is a pathetic record and all they have to do is shrink the largely parasitic state but they do the opposite.

    • libertarian
      Posted October 1, 2015 at 6:36 pm | Permalink

      Petermartin

      The trouble with you Labour party types is you don’t like facts or the real world. We have the highest number of people in full time employment ever. Wages are rising. and the government has just given ALL of the low paid a massive pay rise to a living wage and new employer pension contributions.

      • Posted October 1, 2015 at 11:27 pm | Permalink

        @ libertarian,

        On the contary. I like facts. I always like posting references to support any claims I might make. Except I have thought, from time to time, that any comment with a link takes longer to pass moderation so sometimes I do think twice about including links.

        If you look at GDP per person since 2008 on the link I posted above you can see its flat at best since 2008. Whether its more now than it was then, or less, seems to depend on whether we measure in £ or US$. I’d agree with JR’s remark on that point so there can’t be much in it either way.

        So, if what you say is true about there being more people in full time employment than ever, and I’ve no reason to doubt that, but GDP per person is just about the same now as it was in 2008, doesn’t it follow that the real wages per job must now be lower than in 2008?

        • Edward2
          Posted October 2, 2015 at 8:06 am | Permalink

          But that is because the base line chosen is 2008, the year of the crash and the biggest drop in figures for a hundred years.
          If you chose a year a little further back or chose one more recent the figures would be more realistic.
          Yes there has been a flat line after 2008.
          And recently its been rising again.
          Its a miracle there wasn’t a large reduction for years after 2008 after the open borders, overspending, PFI and debt mess Brown left us.

          • Posted October 2, 2015 at 2:16 pm | Permalink

            The main problem is the build up of private debt in the economy. The Japanese were the first to suffer from this problem in the early 90’s. Type “GDP Japan” into Google and you’ll see the effect of that on their GDP.

            TYpe “GDP UK” and “GDP Ireland” “GDP USA” etc and you’ll see similar problems except fro the USA and they have a $18 trillion public debt!

            Public debt isn’t the problem. That can only cause too much inflation. It can’t cause the recessions many countries are now experiencing.

          • Edward2
            Posted October 3, 2015 at 10:13 am | Permalink

            Japan have other problems such as a cultural desire to save, an ageing population and a society which is one of the most racially pure in the world with little immigration.
            Of course private debt us rising. Nearly every transaction is now done by card which is counted as a debt even if it paid off in full every month.
            Ditto mortgage and car finance.
            Public debt is causing problems.
            You have to overtax the productive sector of the economy and this reduces the economic growth you need to repay.
            Unless you shake the magic miney tree and just print.

  12. a-tracy
    Posted October 1, 2015 at 8:02 am | Permalink

    “More needs to be done to boost output, real wages and productivity”.
    Well this is where the government needs to step in John, improve the road infrastructure faster than you are, the M6, M40 and M25 around Heathrow are horrendous and on a Friday jammed up for several hours every week.
    Business Parks need better, faster public transport links and shops and not unhelpful Council planning departments getting in the way and creating road systems that can’t sustain business parks with only one entrance/exit, you can ask anyone and they will know one dangerous junction in their daily journey.
    Improvements demanded from Utilities companies and their overseers holding them to account.
    The Job Centres need a complete overall and their computer system needs serious improvement.
    Councils should be forced to analyse accident blackspots with information provided by our insurance companies to cut down on insurance costs through repeated poor road management in our towns and cities.
    If you want business to achieve productivity improvements then your government has a part in that too.

    • Lifelogic
      Posted October 1, 2015 at 4:59 pm | Permalink

      If you want business to achieve productivity improvements then your government has a part in that too. Indeed they do they kill productivity endlessly with daft regulations, over taxation, over complex taxation, daft employment laws, expensive energy by religion ……

  13. Posted October 1, 2015 at 8:14 am | Permalink

    The remaining threat to increase the borrowing rate here and in the USA emphasises how consumer spending is out of kilter ; add to this is the ever present problem of out of control public sector debt . How reality can be introduced and bring home to the spenders how stupid it is to continue in the never never land , is quite a conundrum . My young daughter has an attitude of ” I want ” , so , maybe , one should start at this level .

    Political leadership has always been dominated by short term objectives and I have long questioned whether any meaningful management of the economy can come from this source . The changes that are necessary go beyond a 5 year time scale and something has to be put in place to keep the ship on course .

    Meanwhile I am encouraged by the announcement that Lord Lawson has become the leader of the ” Out ” campaign and President of the Conservatives . He was a good Chancellor and a very intelligent communicator ; he is just the sort of ingredient to stitch an organised campaign together .

    • Chris
      Posted October 1, 2015 at 10:45 am | Permalink

      Why then does he perpetuate the smearing of other groups as “xenophobic outers”? That will do nothing for harmony and stitching up. I don’t know of any organised xenophobic outer campaign, but I do know of one based on leaving the EU in order to regain our sovereignty and to control our borders by introducing a points based immigration system.

    • Lifelogic
      Posted October 1, 2015 at 5:07 pm | Permalink

      A good chancellor? Hardly he cut some taxes but he was in favour of the idiotic ERM rather than floating exchange rates! As a result we ended up with the John Major disaster. Still Lawson is sound on the global warming (the catastrophic exaggeration of) religion, having now gained some wisdom on this issue it seems.

      More to the point he is rather long in the tooth for the job.

  14. Chris
    Posted October 1, 2015 at 8:16 am | Permalink

    …..and yet,
    “…Osborne ran up more debt during the last Parliament than all the last century’s Labour Governments combined…”
    Source, Conservative Home.
    http://www.conservativehome.com/thetorydiary/2015/06/in-osbornes-debt.html

    Also,
    “The impact of his (Osborne’s ) austerity programme has been to massively increase the overall government debt. When the coalition came into office the PSND was £956.4 billion, 62% of GDP. Yet Osborne’s economic policy has, according to the HCL Briefing Note, managed to increase it by £529.3 billion to 2014-15, or 80.7% of GDP. This is a strange ‘success’…” PSND: public sector net debt.

    Source: analysis by Martin Wicks of The House of Commons Library briefing note, “Government borrowing, debt and debt interest: historical statistics and forecasts”.

    Reply It was no austerity programme that led to continued high borrowing, but the gentle approach taken to spending that meant continued high borrowing.

  15. alan jutson
    Posted October 1, 2015 at 8:46 am | Permalink

    Just imagine if Government could reduce its spending by being more efficient, by cutting waste, and purchasing smarter.
    We would then really be making progress.

    Lets just hope that “growth” continues, as it is that, that is making the figures look more promising.

    • Posted October 1, 2015 at 1:52 pm | Permalink

      What is ‘waste’?

      Buying too many tins of baked beans? The grocer sees that as more sales.

      Buying too many newspapers? The newsagent wouldn’t think so.

      Spending on Trident or HS2? Plenty of engineering firms would argue about that.

      There’s no such thing as waste – because all spending is actually someone else’s income.

      Even people on benefits contribute to the economy.

      • Edward2
        Posted October 2, 2015 at 8:14 am | Permalink

        By that logic Handbag, all State spending is good.
        Remember the State gets its money from taxing us.
        If we are left with more of the money we create then that is good too.
        I presume you think the State takes our money and spends it much better than we choose to spend it ourselves.
        Well I do not agree.
        In recent years despite taxing us heavily the State has also borrowed hundreds of billions more to spend.
        This overspending has to stop.

        • Posted October 2, 2015 at 2:08 pm | Permalink

          Whether you spend your money yourself or the state takes it from you and spends it on your behalf – the total amount of money in the economy is unchanged.

          • Edward2
            Posted October 3, 2015 at 10:18 am | Permalink

            One is generally put to good use the other is often wasted.
            The State needs to get smaller, tax us less and leave us alone more to get on with actually earning money.
            The private sector creates wealth.
            The public sector just takes it off us, recycles it and having taken away a 25% handling fee returns it to us in the form if some rather average services.

      • alan jutson
        Posted October 2, 2015 at 8:15 am | Permalink

        Handbags

        What is waste.

        Simply goods purchased that are never used, and then thrown away, which then costs money to process.

        Agreed the waste collectors may make some money out of such waste but not as much as the original purchase price.

        Thus money wasted could have been better spent on more useful products or a better investment.

        We are informed by some organisations that the general population throw away about 25-30% of the food that they buy, thus this money could be put to better use. !

        • Posted October 2, 2015 at 1:27 pm | Permalink

          The manufacturer has been paid, the retailer has been paid, the refuse collector has been paid.

          The money goes round and round – which is how the economy works.

          It’s true that the individual purchaser may now have less money to spend – but the idea that it’s ‘wasted’ is nonsense.

          ‘thus this money could be put to better use’ . . . well that’s really a different argument isn’t it. You’re now talking about freedom and I’m sure we could all spend our neighbour’s money better than they could.

          • Edward2
            Posted October 3, 2015 at 10:22 am | Permalink

            If it is not put to best use, it is wasted.
            The State often fails to allocate the money it takes from us correctly.
            By your logic we could all just work for the State and we would not be worse off.
            The State has no money itself, just that which it takes from us.

  16. graham1946
    Posted October 1, 2015 at 10:50 am | Permalink

    Is it really a surprise that we have growth since the 2008 figures? The population is probably several millions more than then, so just that factor alone must account for most of it. The fact is that GDP is a rotten measure and includes things that do not add to prosperity – it just tells you how fast the wheels are spinning, not whether we are actually going anywhere. The basic every day experience of people, for example with the NHS, police, rubbish collections etc . tells a different story, but one which cannot be quantified, but we all know a poorer service when we see it. Things are getting worse, not better.

    Against the statement that politicians are only interested in the short term, which of course has always been true, George Osborne must surely be given some credit in that he has tried to counter this somewhat with the introduction of the OBR to try to keep the government budgets on some sort of track. Previously, the Chancellor could do any old thing and would go mostly unnoticed. Now someone is watching over his shoulder for sustainability. That must be a good thing.

  17. CHRISTOPHER HOUSTON
    Posted October 1, 2015 at 10:58 am | Permalink

    Well it accounts in some part why Local Authority spending and its massive wastage goes on unabated. The government has other people’s money to burn.

    According to Reuters, manufacturing output has gone down. This is despite plummeting raw material prices which should have made it soar in a balanced and sustainable economy.
    Actually, three quarters of UK “growth” is accounted for by “Service Industry” growth. This sounds wonderful. Great, until you go well beyond the short definition of “Service Industries” and realise just what they are. Here’s a clue, they include “financial services”.
    Industries too that receive government money, our money, tax-payers money, one way or other to finance their very existence and “growth”.

    The low interest rates would be a kind of victory ( not for savers of course ) if the intention now and for months had not been to raise them somewhat. Zero inflation rate would be a victory except the BoE has been failing for 2 years to fulfil its government mandate to raise it to 2%.
    The UK, without mentioning Dunkirk, paints defeat and rout as victory all the time .
    All the world around us, Europe, China, Russia,Latin America, Canada, Africa ( America when it dares to judge things non-positively ) is in a downturn,is economically sluggish, is in retreat with falling living standards and less money to spend on even basics. Therefore it is to be wondered that the statistics coming from the UK which with an inflated currency and an over-productive Statistics Department is managing to do so well. Just who are we exporting to? Is it our production of japanese cars we are selling to the failing economy of japan? Is it reselling imported German cars for a profit , naaa.
    We are living in a statistical bubble of course, an economic bubble.
    Mr Corbyn will win by default in the next national election if Mr Osborne does not stop believing his own propaganda.

  18. The Prangwizard
    Posted October 1, 2015 at 11:06 am | Permalink

    I don’t know who, all those years ago, thought that the word ‘austerity’ was the right one; no doubt some bright PR spark or a public relations thinking politician, but it was never accurate. It was a gift for the much of the media, who love to sensationalize and exaggerate.

    It has of course been grossly over-done, and now it is coming back to bite you. The Left here and elsewhere now ‘reject’ it. That will go down well with the lazy grasping variety and there are many of them. They are of course rejecting a myth, but that doesn’t matter, few people realise.

    We need a change in the rhetoric, but most of all we need a serious leader who does not think in sound-bites and can express himself in depth. There is a man, but sadly he is the leader of another country.

  19. forthurst
    Posted October 1, 2015 at 1:00 pm | Permalink

    ONS:

    “In 2014, the UK’s current account deficit was £97.9 billion, up from a deficit of £76.7 billion in 2013. The deficit in 2014 equated to 5.5% of GDP at current market prices. This was the largest annual deficit as a percentage of GDP at current market prices since annual records began in 1948.”

    “The mid-2014 estimate for UK population: 64.6m”

    Summary: the GDP per capita figures are pure hokum; the government has no clue as to the current resident population since it does not attempt to control our borders. Our GDP is increasing in response to more people buying more imported stuff and our current account deficit is deterioriating as a result of our import bill and the continuous attrition of our productive industries by foreign acquisition and the Global Warming Hoax.

  20. Iain Gill
    Posted October 1, 2015 at 4:59 pm | Permalink

    I don’t recognise this feeling of job security you mention. I don’t think employment is doing well. Proportion of income spent on accommodation has got silly. Sure we are not in austerity but most visible public spending is wasted, inefficient, and not something to be proud of. Immigration is out of control. Knife crime is going through the roof since Ms May stopped front line coppers stopping and searching as much as they would prefer. More sink estates are emerging. More failing schools emerging. Less citizen choice in public services. Higher silly taxes against the productive. This maybe better than a Miliband/SNP government but its nothing to be proud of.

  21. APL
    Posted October 1, 2015 at 7:42 pm | Permalink

    JR: “The UK economy is now producing 6% more … ”

    The problem with this statistic is that you are measuring the value of the £sterling zone in …. £sterling, which itself has been devalued by over 9,000 per cent since 1913.

    reply. the 6% is a real figure after allowing for inflation

  22. Jon
    Posted October 1, 2015 at 7:43 pm | Permalink

    Why Osborne and Cameron are more honest about the figures.

    You know John, for all Parliamentarians protestations and fervour for regulating the words of others, they don’t half want to resist the same emphasis on facts to be applied to their statements.

    A whole new industry was created at Parliaments bequest to check what financial advisers could or could not say. Not so the Parliamentarians, not wanting to apply facts to them selves, can’t even call an MP a Liar in the Commons.

    Each era of Parliament has it’s way whether soundbites or spin or realpolitik.

    Corbyn, Sturgeon, Salmond, Burnham etc etc claim to be outsiders and honest and not spin merchants but peddle the false austerity claim.

    Osborne and Cameron don’t claim to be outsiders, don’t claim to bring in a new pure honest politics as they talk about austerity that isn’t. They are professional politicians playing the game.

    The difference between the two is that I know where Osborne and Cameron are at. The others are claiming to be a new kind whilst surfing on the same lie.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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