Thursday, August 17, 2006

Is Labour neglecting to get across the good news about the economy?

I'm always astonished at the number of people (usually Tories or somehow indisposed towards Labour) who believe that the economy is now slowing down (when it is accelerating), who believe that the economy is growing slower than forecast by Gordon Brown in the budget (it's growing faster than predicted) and who complain that we arn't doing as well as other countries.

I thought I'd do my bit to counter these false impressions by posting some stats.

First recent growth. The growth figures for the year to June 2006 are as follows:

0.4% Third Quarter 2005
0.7% Fourth Quarter 2005
0.7% First Quarter 2006
0.8% Second Quarter 2006

That gives growth in the year to June 2006 at 2.63%. The treasury forecast for the whole of 2006 was growth of 2 - 2.5%. The Bank of England yesterday revised their forecast up to 2.8%.

Regarding comparisons to other countries, this handy pdf file from Eurostat, gives growth figures from 1996 for all EU countries, EFTA countries, countries applying to join the EU and the USA and Japan.

I thought it would be instructive to post the figures for the UK and the USA for comparison.


1996 2.8% 3.7%
1997 3.0% 4.5%
1998 3.3% 4.2%
1999 3.0% 4.4%
2000 3.8% 3.7%
2001 2.4% 0.8%
2002 2.1% 1.6%
2003 2.7% 2.5%
2004 3.3% 3.9%
2005 1.9% 3.2%
2006 2.5%* 3.2%*

* = forecasts

During the four years from 2000 to 2003, we outperformed the USA. This year, though the US is forecast to grow faster than us, they are slowing fast (they grew slower than us in the second quarter), while our forecast might have been too low. We might find ourselves outperforming them again. Which means we're not doing badly at all.

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