OECD report hands economy boost to Gordon Brown

Discussion in 'Current Affairs, News and Analysis' started by rgjbloke, Apr 7, 2010.

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  1. Interesting and welcome news on the economy.

    Heres the link: http://business.timesonline.co.uk/tol/business/economics/article7090155.ece#cid=OTC-RSS&attr=797084

    Gordon Brown's election campaign pledge to strengthen the country's nascent economic recovery was boosted today after new figures revealed that Britain is expected to grow faster than its G7 counterparts over the first half of the year.

    In its outlook for the group of developed nations in the first six months of 2010, the Organisation for Economic Co-operation and Development estimates that the UK economy will grow at an annual rate of 2 per cent in the first quarter of the year.

    This is faster than Germany, Japan and Italy but will not match the pace of Canada, the US and France. In the second quarter of the year, between April and June, the OECD forecasts UK growth of 3.1 per cent in the second quarter, higher than any of the economies in the group except for Canada.

    Mr Brown argues that the Conservative's cost-cutting plans could undermine Britain's recovery and risks sending the economy into a double-dip recession. GDP figures due on April 23 - two weeks before the general election on May 6 - will reveal if the British economy is growing or has plunged back into negative territory.
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    Britain lagged behind the world's largest economies in emerging from recession, which it exited in the fourth quarter last year, compared to America, Japan, China, Germany and France who all reported GDP growth in the third quarter of 2009.

    In last month's Budget, Alistair Darling said he expected GDP growth of between 1 per cent and 1.5 per cent for this year. He revised down forecasts for next year from between 3.25 per cent and 3.75 per cent to between 3 per cent and 3.75 per cent

    Commenting on whether the OECD's forecasts for the first two quarter of 2010 tally with the Chancellor's expectations for the year, Howard Archer, chief UK and European economist at IHS Global Insight, said: "This outlook looks very optimistic compared with other predictions.

    "Alistair Darling will be delighted with these figures as they imply that the economy is picking up more than he forecasts. He could point to it as further evidence that we are coming out of recession.

    "The government may also be worried as one of their big selling points for the election is they don't want to cut spending this year because the economy is too fragile. These figures suggest the economy is recovering at a faster pace and could also be used by the Conservatives to support Cameron's view that we should start cutting spending now. "

    New figures today suggest that the economy is still fragile. Britain's dominant services sector expanded at a slower-than-expected pace in March after reaching a three-year high in February.

    The Purchasing Managers Index (PMI), the leading index of services activity which covers everything from financial services through to restaurants, fell from a reading of 58.4 in February to 56.5 in March, according to index compilers Markit and the Chartered Institute of Purchasing and Supply (CIPS), suggesting the UK still faces a slow climb out of recession.

    Britain’s services sector accounts for nearly three quarters of GDP and today’s poor reading will add to concerns about the rate of the country's recovery from recession between January and March this year.

    Sterling fell to around $1.5232 against the dollar, a drop of more than 0.2 per cent, from $1.5280.

    Employment in the sector edged up during March, the PMI showed, ending two years of corporate bloodshed as companies laid off staff.

    David Noble, chief executive of CIPS, said he hoped the figures were the start of a “tipping point” in job creation.

    “It is hugely encouraging to see the number of jobs in the sector increase for the first time in nearly two years,” Mr Noble said.

    “Whilst business conditions have been recovering for a few months now, most employers have been wary of taking on new staff until they are sure this is a genuine and sustainable recovery.”

    Across the services sector, IT and business services reported the strongest growth in March.

    Yet despite large companies performing well, smaller businesses are lagging behind and still laying off staff.

    “It won’t be until we see these smaller businesses really start to recover that we can say the services sector is returning to full health.”

    Howard Archer, chief UK and European economist at IHS Global Insight said the slowdown in services growth in March was “nothing to really worry about”.

    The sector’s exceptional performance in February could be an artificial high due to the sector making up for a loss of business in January, he said.

    “At 56.9 in March, the business activity index was still well into expansion territory,” he said.

    “Furthermore, other elements of the survey bode relatively well for services activity in the near term at least, with incoming new business seeing pretty solid growth, business expectations climbing to a near three-year high and employment in the sector edging up for the first time since April 2008.”

    The PMI has been accused in the past of painting a rosier picture than figures issued later by the Office for National Statistics (ONS).

    Mr Archer said: “The hit to services activity in January is highlighted by the ONS reporting that services output fell by 0.7 per cent month-on-month.”

    The results come as a survey of more than 5,000 companies published by the British Chambers of Commerce today suggests that service companies reported a rise in domestic and export orders.

    Activity in the construction and manufacturing sectors also picked up in March, surveys published this week showed.
    • Bullshit Bullshit x 1
  2. Well, when I did it, at least there was some flare about it.

    I am also a little bit miffed about how the times has reported this. The OECD is not saying there will be growth of 3.1% in the second quarter of the year. It states that annual growth will return to 3.1% by the end of quarter 2.

    Gees. It comes to something when you can't trust The Times.

    Anyway, RGJ, sadly, this thread will PROBABLY be ignored, as it points out facts that others on here will just refuse to listen to, as it disagrees with their world view. Best to pretend this just didn't happen.
  3. Wow, Gordon's saved the world again :roll:
  4. Actually Bazz I will ignore it for an entirely different reason.
    Despite claims of an impending imrovement Brown's mismanagement is squeezing me dry.
    Work is in short supply and Brown's failure to get a grip on fuel costs is going to cost another driver his job at my place. His tax and burn philosophy over the years is financially killing me and I fervently hope he tops himself after he loses the election.
    Good news? I'll believe it when I see it. At the moment its nothing more than spin and conjecture.
  5. Alsacien

    Alsacien LE Moderator

    Just the little problem of what it has cost UK to get on the road to recovery to resolve now......and a few questions as to why it took longer than others, and why did UK go in so deep compared to others.

    All it would take is a hung parliment and a run on the pound to bring everything crashing back to reality.

    Even the most crappy company making the most crappy product could grow at 3% if you chuck enough money at it - does not mean the situation is wonderful.
  6. It did occur to me reading this on the BBC that it read like a political broadcast for the Labour party.

    Growth is great. Being second-to-top of the G7 is great. Having a fcuk-off gigantic national debt and a significant percentage of the population not economically active is not quite so awesome; a little analysis might be nice from the boys at Television Centre rather than just repeating things in slightly shorter words, with emphasis on the bits that make the government look good.
  7. That is a personal point of view - to give you some balance to that, I have hired 3 people over the last month, and my housemate has seen his bookings go up between 500 and 600% over the last three months. So I think the economy IS improving. I know that my organisation ahve had an even better year this last one.

    The point is that different bits of the economy will grow at different times and different points.

    But the overall picture is improving. The OECD tend to be fairly impartial about this sort of thing.

    The key question is: If the economy is growing, then does that mean that Cameron is right, and now is the time to start cutting? Brown and Darling seem to still have a sweet tooth for growing government expenditure. That may now be the wrong tactic, where as previously it was the right tactic.

    FORMER_FYRDMAN LE Book Reviewer

    But the percentage increase is only material as a comparison with other economies if you supply the base figure being expanded. I suspect that we are expanding from a smaller base than most of the others, which is why only Canada is ahead of us as the year rolls out as its base is smaller still. That the US and France are currently matching us with their bigger economies is a bit of a reflection and not the unalloyed good news for Gordon that you believe.

    If you borrow tens of billions and pump them into the economy you are bound to see some benefit, the issue arises when you have to pay the money back and so far the markets have held off in the expectation of a Conservative win. It would almost be worth another twelve months of Labour to watch Gordon being engulfed by the resulting sh1tstorm as his current unsustainable policy reaches critical and he has to bow to the inevitable before being slung by the heels from a petrol station gantry - just as long as I was paid in something other than Sterling.
  9. Alsacien

    Alsacien LE Moderator

    Talking of petrol - some scaremongers are suggesting a massive rise in the next 2 quarters.....
  10. I just love the way the recession was entirely down to evil bankers and other factors outside Gordon's control but the recovery is down to the one eyed canute's fiscal genius.
  11. [Imagine I have put a smiley here of a man doing a double take - I don't know how to get one.]

    Which measure are you using there? Total GDP? Well that puts the US as a much bigger economy, but France as 7% bigger than ours, BUT only if you include the france overseas territories and ignore the british ones. Without them, they are about the same (UK probably slightly ahead). If you use the GDP on a PPP model, then the UK is larger than France economically.

    Of course, if you use the atlas model (which I think the world bank uses) the UK economy is bigger than France whether you take PPP into account or not.

    Care to revise your comment?
  12. Growth despite Brown, not because of.............

  13. Here here.

    The reporting of it has been completely one sided. I am not one for bashing the BBC, but the way they reported it could have been written by Lord Mandelson himself.

  14. If I'm skint and borrow £10,000 and spend it, I will create an air of affluence, but I'm still skint and now deeper in debt.

    THis is Broons 'economic miracle'.

    FORMER_FYRDMAN LE Book Reviewer

    Not really because I was discussing the position in the light of the quoted report.

    Your post clearly articulates why complex economics cannot be summarised with a single, simple set of figures and I agree with you, even if you occasionally post like a tractor production-obsessed Bolshevik. :D