The 0.2 per cent first estimate of Britain’s second-quarter growth was disappointing. But if ministers were hoping for an upward revision at the next calculation, June’s industrial production figures must dampen their hopes. Manufacturing production fell by an expectedly high 0.4 per cent.
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Britain has had low growth and high inflation at stages in its economic history. It has had low growth and high interest rates. It has even had low growth and low inflation. But today’s low growth and low interest rates is a unique combination. However, if cheap money isn’t stimulating the economy, what will?
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Surprise, surprise: US politicians agreed a deal on the national debt just before the deadline. But it solves nothing. A country that lives beyond its means has just approved an increase in its overdraft limit so that it can continue its profligacy.
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Excuses are booming; unfortunately the UK economy is not. Growth was just 0.2 per cent in the second quarter, according to Britain’s official statisticians but they insist might have been 0.7 per cent if we allow for the weather, the royal wedding, Olympic ticket sales and the Japanese earthquake.
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As if a weak economy was not a problem, Britain has high inflation too. But hang on, shouldn’t a weak economy put a brake on prices? Instead of inflation being imposed on the public, the people have the power to curb it.
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We replaced manufacturing with banking as the driver of the UK economy. Will foreigners buying jewellery and shoes be Britain’s new saviour? The country has a two-tier economy with London flourishing while the provinces hover close to recession.
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Britain is back in recession according to the official growth figures. But luckily for the chancellor, negative economic growth over two quarters is not the same as two quarters of negative growth.
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First, US sovereign debt will not lose its AAA credit rating. Second, it wouldn’t matter if it did.
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Japanese industry invented just-in-time production but the March 2011 earthquake there is showing the risks that can result from JIT. Companies across the world are having to halt manufacturing because their supply of parts has dried up.
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“Export of die” was the government edict to business after the Second World War. On current trends, we might just live: demand for our goods from strong countries could yet bale out our own economy.
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