UK growth rate revised up

Once again this week we have seen the UK growth rate revised up, both for 2016 and for 2017.  I drew attention to the strange downgrade of 2016 from 2% to 1.8% in the official figures at the time and queried it. Now I see they have put it back up to 1.9% so far.  There never was a shred of evidence that the referendum vote led to any loss of output growth in the second half of 2016.

The latest figures for the five years to end 2016 make interesting comparisons. Top of the pack was the USA at 13.1%, followed closely by the UK at 12.7%. Germany was the best of the larger continentals, at 10.8%, followed by France at 6.1% with Italy actually down by 1.8%. In 2016 with half the year after the vote the UK was the top performer of these countries.

The UK this year is likely to finish the year at a higher rate than many forecasts. There have been various reports of how our growth rate is now the slowest of the G7 but this looks likely to be untrue  and has definitely been based on unduly gloomy figures. It is the case as I have pointed out that the tax increases on property and cars have had an adverse impact on sales and activity of these items,  the official concerns about diesel cars in particular have depressed sales substantially and the Bank is seeking to reduce consumer and car loans.  None of this has anything to do with Brexit.

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35 Comments

  1. Lifelogic
    Posted December 23, 2017 at 4:30 pm | Permalink

    Indeed and this despite the tax borrow and piss down the drain. Green crap, interventionist agenda of May/Hammond and the very real threat of Corbyn destroying confidence and the economy.

    • sm
      Posted December 23, 2017 at 7:40 pm | Permalink

      It really isn’t difficult to tell the difference between you, Lifelogic, and a ray of sunshine.

  2. D Gardener
    Posted December 23, 2017 at 4:47 pm | Permalink

    However, the Current Account went a further £22 Billions into the Red again. That makes it £75 Billions DOWN for the year.
    Are these figures no longer relevant? Where does the missing £75 Billions come from?
    Borrowing?

    • DaveM
      Posted December 23, 2017 at 9:56 pm | Permalink

      Money’s not real any more – not since it became fully electronic.

    • Epikouros
      Posted December 24, 2017 at 9:54 am | Permalink

      Despite concern to the contrary they are not economically relevant. For the consumers they are perhaps indicating that they are being allowed greater freedom in their choice of items they can purchase. Hence better value for money and a higher standard of living. Maybe it is an indicator that domestic producers in some sectors at least need to become better at what they do and supply goods and services at a better price and quality.

    • acorn
      Posted December 24, 2017 at 1:47 pm | Permalink

      Have a look at Fig 3 in https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/quarterlysectoraccounts/julytoseptember2017

      You will see that all sectors were running deficits to pay the Rest of World (RoW) for the imports with Pounds Sterling. The RoW has to find something to do with all those Pounds.

      The General Government, as the currency issuer, isn’t actually borrowing from any other sector, they are all currency users.

    • Rien Huizer
      Posted December 25, 2017 at 12:07 pm | Permalink

      Capital imports. Could be anything: changes in portfolio investment (equities, bonds, unit trusts), changes in the value of FDI etc. If this goes on much longer it might result in borrowing.

      The immediate effects are masked by QE: if the BoE does not buy gvt bonds and print omney to pay for them, the amounts invested must come out of savings. Or from abroad.

  3. alan jutson
    Posted December 23, 2017 at 5:07 pm | Permalink

    Perhaps who ever comes up with these surveys and guesswork predictions should just ask you in future, as you seem to get it right more often than they do.

    Clearly your forecasting model seems more reliable than theirs.

    I really am getting fed up with all of these warnings and depressing forecasts which have to be constantly altered in the light of further information.
    No wonder our commercial businesses have trouble making long term investment decisions.

    I wonder how long it will take the IMF will re adjust their latest forecast.

    Guarantee the BBC will not broadcast it when they do, if its good news.

  4. ian wragg
    Posted December 23, 2017 at 5:26 pm | Permalink

    Stop being such a spoil sport John. The first born will start dying shortly after Hogmanay and the plague of locusts is at Calais awaiting to board a ferry.
    Wen ow have operation ” Reverse Brexit” in full force led by the unelected Peer and assisted by Bliar, probably one of the most despised people on this planet.
    Operation “Second Referendum” is due to start just after Easter.
    Remember, we are watching, any Brexitino will incur the wrath of a large chunk of voters.
    Caveat Emptor.

  5. Helen Smith
    Posted December 23, 2017 at 6:45 pm | Permalink

    Oh no, more bad news for Remainers, still they can always ignore it and bang on about the missing £350m on the side of the bus, which of course can never happen if they get their way.

    • Leslie Singleton
      Posted December 24, 2017 at 9:41 am | Permalink

      Dear Helen–There was another chance to give Nigel Farage his abundantly obvious due and at the same time slap down the remainiacs, but No, for reasons I cannot BEGIN to fathom. Does anybody have the slightest idea why some who were knighted last time actually merited it–I mean the SLIGHTEST idea? Personally I don’t think I had ever even heard of the likes of Starmer and Vaizey and certainly never felt the lack.

  6. Chris S
    Posted December 23, 2017 at 7:00 pm | Permalink

    The tax changes by Osbourne and now Hammond have done to the housing market and the automobile industry have caused immense damage which has spread throughout the wider economy.

    Had they not increased stamp duty ( particularly for second property and BTL purchases, for example ), housing sales would have been substantially greater and thousands more housing units would have been created through sub-division and extensions without requiring the use of more green field land.

    The progressive removal of tax relief on financing BTL financing cannot be justified. Portfolio landlords are running a business like any other. Why should they alone be singled out for harsh tax treatment in this way ?

    Capital Gains Tax on property sales was increased progressively by Brown and Osbourne and there is now huge pent up demand amongst property owners who would like to sell but would be subject to penal amounts of CGT.

    The take from CGT would actually increase if Hammond had the foresight to cut CGT rates or re-introduce taper relief which Brown so foolishly removed. That would release a huge amount of cash into the economy and the buyers would spend money on refurbishment and improvements which would raise lots of VAT.

    Both these property issues are preventing me from passing properties onto my children, as I would like to do. It will be cheaper for them for me to remortgage them, give the money to my children and keep them in my ownership than to pass them on. The eventual Inheritance tax would actually be less than the stamp duty and CGT on what I would like to be a gift !

    Then we have the idiotic saga over Diesel cars. Again, started by Brown and made catastrophically worse by Hammond. Few private buyers dare buy a new car at present because of the fear that the Chancellor could suddenly decide to dramatically increase VED on their choice or they might find they can’t drive their chosen model through their nearest city.

    To create confidence in the car industry the government needs to provide some guarantees on future VED rates and the direction they intend to take over fuel tax and where we will actually be allowed to drive.

    It’s a complete mess and it’s all down to the last three chancellors, two of whom, It gives me no pleasure to say, have been Conservatives.

    Mrs May should give the Job to someone sensible like Michael Gove or our Host.

  7. Bob
    Posted December 23, 2017 at 7:46 pm | Permalink

    Chris Grayling is trying to revive New Labour’s road pricing scheme under the pretense of leveling the playing field between UK and continental HGV operators.

    Despite his claims to the contrary this is clearly the thin end of the wedge to replace the lost revenue due to proliferation of electric cars as advocated by Mr Gove.

  8. Duncan
    Posted December 23, 2017 at 7:49 pm | Permalink

    Lies, lies and more lies. This is the nature of the EU and the European-wide political and business establishment who conspire to generate fear and gloom through fabrication, exaggeration and downright scaremongering

    Even UK politicians on the government Front bench are behaving in a manner that is utterly shameless. The politics of today is one of arrogance and contempt for democracy

    We are entering a truly dangerous period in which a deep-state political clique here, in the US and in Brussels view ‘the people’s will’ with an absolute hatred that should send shivers down the spines of all democrats

  9. agricola
    Posted December 23, 2017 at 8:53 pm | Permalink

    Can it be said that those making these judgements and predictions are whiter than white. How many of them have a vested interest in telling the story they wish us to hear. The IMF for instance has a leader too steeped in politics for her judgement to be motiveless, having made lending decisions that are beyond the original remit of the organisation. These oracles of finance would be better to judge what has happened, rather than what they think will happen or would like to happen.

  10. Bert Young
    Posted December 23, 2017 at 8:54 pm | Permalink

    It’s good news and I hope we can sustain the growth further in the New Year . Lagarde and Carney need to go back to school .

  11. Jonp
    Posted December 23, 2017 at 10:51 pm | Permalink

    What are we talking about here GDP or GNP how does it fit with borrowing deficit and the national debt and what about aftet march 2019? what does the curve for growth show then? If things are going so well we won’t need that extra 350 mill from the EU for the NHS..sorry but I don’t believe a word..all thats coming from politicians these days is spin and more spin

  12. Prigger
    Posted December 23, 2017 at 11:36 pm | Permalink

    Not heard much…well nothing …from the BBC about the week before Christmas retail sales. Must be good news, again.
    In the New Year they’ll say ” Well, if we look at the statistics, historically, we find that people in a state of utter depression about the economy AND IT GOT WORSE BECAUSE OF BREXIT spend more to cheer themselves up. ”
    They will point out alcohol sales massively increased because of Brexit

  13. Andy
    Posted December 24, 2017 at 12:51 am | Permalink

    The real comparison, then, comes in 2021 – when we can see five clear years after the calamitous Brexit vote.

    You’ll have run out of excuses by then.

    • Epikouros
      Posted December 24, 2017 at 10:01 am | Permalink

      Remainers will never run out of rubbish and totally inaccurate things to say or print.

    • Edward2
      Posted December 24, 2017 at 10:02 am | Permalink

      First it was doom if we dared to vote out.
      Then it was doom in the first year after the vote.
      Now it’s doom five years after the vote.

      Every negative event is because of Brexit in the minds of Remainers.
      It’s getting ridiculous.

    • Denis Cooper
      Posted December 24, 2017 at 10:04 am | Permalink

      But you won’t have run out of bile …

    • Ajay Gajree
      Posted December 24, 2017 at 10:55 am | Permalink

      Calamitous how? Where is your instant recession, 1 mln job losses and FTSE100 collapse? And spare us the “we haven’t left yet” mantra of the ardent remoaners.

    • Prigger
      Posted December 24, 2017 at 11:15 am | Permalink

      Oh the Cliff Edge has moved!!!!From 24th June 2016, then Christmas 2016, then January 2017, then the new tax year of April 2017, then the summer holidays where no-one will able to afford a holiday abroad, then the start of the school year September 2017 as parents cannot afford school uniforms, then the Autumn Budget 2017 in November..What??? No Cliff Edge at Christmas Time????? Now Remoaners have moved the Cliff Edge to 2021.
      Cliffs are always moving about. Look at the the White Cliffs of Dover, right up to the River Witham and The Haven, Boston in Lincolnshire! There you go!

  14. Fedupsoutherner
    Posted December 24, 2017 at 7:38 am | Permalink

    That’s a joke! If banks are reducing car loans his are we supposed to buy new electric cars? We don’t all have a shed load of cash hidden under the mattress.

    • Epikouros
      Posted December 24, 2017 at 10:08 am | Permalink

      As a taxpayer you had better find some way to locate some because without taxpayers subsidies electric cars and other green nonsense the environmentalists are not going to be able to force us to build their new counterproductive regressive green Utopia.

  15. Rien Huizer
    Posted December 24, 2017 at 11:34 am | Permalink

    Dream on!

  16. hans chr iversen
    Posted December 24, 2017 at 11:49 am | Permalink

    John,

    If we have to pay £2000 for a car now than we did before the vote we are bund to buy less cars and this is due to Brexit, or do you have another explanation again for the fall in Pounds sterling

    • Edward2
      Posted December 24, 2017 at 6:28 pm | Permalink

      There is a huge choice of cars for sale at a huge range of prices from dozens of nations including many fine home made ones.
      Recently there have been some excellent deals available to trade in your older car and some equally good cheap leasing deals.
      So I have no idea where you doom laden claim that cars are £2000 more “because of Brexit “

  17. Melvin Cornwell
    Posted December 24, 2017 at 1:40 pm | Permalink

    FUS

    Most ordinary folk DON’T have cash kicking around, it’s true. But then, these restrictive moves are purely designed to prevent ‘ordinary people’ upgrading their lives. It’s all based on the idea that if the elite / establishment can make us all ‘miserable enough’ we will somehow rail against Brexit as the cause, when actually (as JR rightly points out), it is all CONFECTED agro from the remain camp and its cronies.

    We will not be changing our minds, whatever. Leavers fully explored their vote options, and are holding fast to their initial judgements. It was Remainers who just ‘did as they were told’ or ‘went for the status quo’, hence so many of them had literally NO IDEA what they were voting for.

    As with so much nonsense coming from the Remain camp, then, the TRUTH is the exact opposite of what they are spouting.

  18. MKB
    Posted December 24, 2017 at 1:51 pm | Permalink

    Brexit will wreck our great country, the majority of independent financial, business and economic surveys have shown this.

    I have heard of no evidence that the BBC is against Brexit, indeed they are nearly as bad as the right newspapers who write misguided articles daily.

    The audience for programmes such as ‘Any Questions’ are open to all, yet every week the Remainers on the panel always get the biggest applause even in towns that voted to leave the EU. The clued up general public know full well that Brexit is wrong for this country.
    Brexiteers are running scared.

    • Posted December 24, 2017 at 5:10 pm | Permalink

      Do you honestly believe your own words?

    • Edward2
      Posted December 24, 2017 at 6:23 pm | Permalink

      “I have heard no evidence that the BBC is against Brexit”
      A quite incredible comment.

      Not one Question Time programme has had a panel where Leavers have a majority.

      And as for the “carefully chosen” studio audiences….

  19. zorro
    Posted December 24, 2017 at 7:39 pm | Permalink

    LOL ….. like the QT audience in Bradford! Dream on!

    zorro

  20. Dave
    Posted December 25, 2017 at 3:29 am | Permalink

    I honestly think that remoaners like you desperately want the economy to fail so you can be proved right. This is Great Britain the 6th biggest economy in the world, do you really think we can’t thrive and prosper under our own steam you negative, pessimistic, glass half empty clown? Stop talking this great country down.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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