GDP grew faster than expected in the Third quarter at 0.8% per quarter, which is 3.3% faster than a year ago. According to the detail supplied by the ONS, the best performance came from business services and finance (in particular architects, engineers and management consultants), which grew a strong 1.7% per quarter. Distribution, hotels and restaurants grew by 1.1% in the quarter. By contrast growth in government and other services slowed, with zero growth, compared with a rise of 0.1 per cent in the second quarter. For the first time in a while ALL the growth is coming from the private sector.
This all came as a bit of a surprise to economists, who were expecting a slowdown due to a knock in confidence after the turmoil in capital markets, and the Northern Rock business. The Bank of England too had estimated slower growth in the third quarter in their August inflation report.
How to explain the robustness of the consumer? Part of it is that people have confidence in the abilities of the Labour government to protect them from a downturn. Part of it is that unemployment continues to drop. According to the ONS, the number of vacancies stands at 668,800 in the three months to Sept 2007, the highest since 2001. There is work out there for whoever wants it, including taking on a second job if interest rates are biting.
The global economy could still derail us - I've been worrying since April whether the American economy will affect ours. Plus there is oil, and the delayed effects of interest rate rises.
It's almost a certainty that interest rates will be held next month though, despite RPI dropping and CPI being unchanged for August at 1.8%.
Maybe the much predicted slowdown will come in the fourth quarter, with a rate cut in January.
9 comments:
Hmm Ten years into the last tory government there had been one crippling recession and spiralling interest rates. Brown may not have been always right as Chancellor but he must have been doing something right!
jams o donnell - I agree. We are in a sort of economic golden age which will end if and when the Tories get back in, and people will look back and wonder (even though they now take it for granted)
An economic golden age near the end of which the disparity in wealth and income in UK society is actually worsening after having not improved under Labour. It's actually now worse under Labour than it was previously under the Tories.
A golden Age in which the Labour Government has missed virtually every one of its targets on poverty (and the environemnt by a huge margin).
A Golden Age in which (see the recent Sheffield Uni research) the extent of social polarisation has returned to 1930s levels - with many of the better-off never ever even meeting or mingling with the poor during their lives.
A Golden Age in which Civic Engagement and participation in elections has been the lowest on record with turn-outs still getting less and less.
A Golden Age during which we had a Prime Minster who took us into more wars than any other.
A golden age in .... Oh, I just cannot go on with all this good news... and it's all OK because the economy has been very, very, 'golden' for some at the expense of many... but there again Social Justice and the Labour Government have been one of the hallmarks of this Golden Age hasn't they? Hasn't they?
Ted, you are a Tory, so of course you would say those things. But it remains true that the country is more prosperous than it ever was under the Tories, with work available for everyone who wants it.
The Tories will NEVER even be able to achieve a fraction of what we have now, given their reckless attitude to economic management. Apres New Labour le deluge, and at that point the public will realise what they've had this last decade.
snowflake5 this was my first contribution to your blog and your response is a "you are a Tory, so of course you would say those things".
That is baseless, pathetic and juvenile name-calling. So you should certainly not be commenting on grown-up things like the economy.
You are not only rather silly, you are quite misguided and blinkered. How can you know I'm a Tory? For your information I have never voted Tory in my life and cannot ever contemplating doing so.
Secondly, you are clueless, because if you knew anything about Tories, you would know that virtually all that I listed, would actually be seen as 'Golden' successes by that they would be proud of.
Indeed it is those kind of failures that the discontents within the Labour movement cite when complaining that their Party has gone right wing.
But there again as you're someone who blog-postures with using French alongside New Labour, and waits arrogantly for "the public will realise what they've had" you'll be pretty clueless about all that reality as well.
I would ask for an apology, but something tells me you are not up to that.. you'd probably jsut respond with more of the same, sadly thinking that that's a substitute for worthwhile, or even funny, exchanges.
snowflake5 I see that my reply to your last, and pretty disagreeable, comment has not appeared. Has it been blocked?
Ted Harvey - no you haven't been blocked - I've just been too busy in the last few days to log in and check my comments!
I should not have assumed you were a Tory. But the points you were making were based on an idealism that is impractical.
For instance you blame the government for the low turnouts - but what is govt to do, drag people by the hair to the polls? It's a FREE country, and if people wish not to vote it's up to them.
The reason turnouts in the past were large, was because those were all elections where people felt desperate about something. Worried about the state of the country after war in 1945. Worried about the winter of discontent in 1979. Worried about recession in 1983. Worried about recession again in 1992. When there is a close election, or something important at stake, you may be sure they will turn out again in numbers.
As for your claims that poverty is worse under Labour than under the Tories? Really? You think the excess of 10% who were unemployed under the Tories were better off then, than they are now with jobs? That they were better off with no minimum wage than with? That they were better off without tax credits than with? Please. It's this kind of silly reasoning that gives politics a bad name.
We are living in a golden age. It hasn't been this good in living memory. A big clue is that people don't feel desperate in the way they did in the past. But it sticks in the throats of people like you to admit it.
Ive just had a bit of a disagreement about labour and the tories with my stepfther over dinner. in fact I voted for Tony at the election and my stepfather is staunchly Labour. However I faced the usual critisism that I was far too young to know what went on under the last tory gov't. I was born in 76 and was in fact well aware of the recession, unemployment and high interest rates. My question to everyone is this -Is Gordon Brown really good with the economy? Or is he just lucky that there have been no problems with the world and particularly the American economy. Whils tnew labour have been in power. And also with this credit crunch and dropping US house prices. If there is a world depression will Brown be able to do anything to stop it effecting the british economy badly. Also if Someone could possibly tell me what the state of the global economy was under the tories when the big recession hit!
My view at th emoment is that Brown just got lucky as Chancellor and Darling has assumed the job at the worst time possible- i sure if it all goes wrong Brown will be able to distance himself from the Exchequor
Hi split - there was a famous golfer who retorted that it was funny how the harder he worked the "luckier" he got! It's simply not possible to have ten continuous years of growth simply by luck. If "luck" was all it took, then the USA, France, Germany and Japan would not have plunged into recession at various points in 2001-2003.
The fact is that under the Tories everytime there was a global recession/slowdown, it happened worse in Britain. The deepest recessions of the 20th century occured under the Tories. Under New Labour, the economy has sailed on regardless of what is happening globally.
If the Labour government steers us through this current global crisis without the UK taking a hit, it will be the SECOND global slowdown they will have protected us from. This will be unprecedented - nothing like this will have been experienced in Britain for a few centuries. If the government pulls it off, they deserve to be re-elected.
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