Thursday, August 14, 2008

GDP Growth Among Our Competitors

Eurostat have just released the growth figures for the EU, and as always have included figures for the USA and Japan for comparison. Here's what has been happening since Q3 2007. All figures state growth per quarter:



Country Q307 Q407 Q108 Q208

Ireland 0.6 0.1 -0.2 *
Spain 0.7 0.8 0.3 0.1
France 0.7 0.4 0.4 -0.3
Germany 0.6 0.3 1.3 -0.5
Italy 0.2 -0.4 0.5 -0.3
UK 0.6 0.6 0.3 0.2
USA 1.2 0.0 0.2 0.5
Japan 0.2 0.6 0.8 -0.6



* denotes figures not available yet

As you can see the UK is holding up despite having higher interest rates than any of the countries listed (base rates in the UK are 5%, in the eurozone 4.25%, in the USA 2% and in Japan 0.5%)

On a more general point, it seems that countries with a good amount of domestic consumption are holding up, while countries who rely on exports are vulnerable to their target markets suddenly not buying. The USA has survived because of a massive cut in interest rates, plus $100bn of tax rebate cheques mailed out in the first half. The real test is how they cope now the rebates have gone.

Things that affect domestic consumption in the UK are oil and food prices and credit. Of these, oil and food should ease later in year, as drops in the prices of commodities feed through. That in turn should bring down inflation and pave the way for a rate cut.

If the UK gets through this world storm without contracting, Gordon Brown deserves a medal, as this will have been the second world storm he steered us through without contraction.

7 comments:

Harry Flashman said...

You need to revise your table.

Q2 in the Uk was 0.0% - ie breaking the run of quarters of growth started by Ken Clarke.

http://www.statistics.gov.uk/pdfdir/oie0808.pdf

snowflake5 said...

I expect the growth of our competitors will need to be revised too. Will wait for the Eurostat figures.

P.S. you keep mentioning Ken clarke - you are aware that he was only chancellor for three and a bit years (out of the eighteen that the Tories were in power)?

And that during those eighteen Tory years, there were thirteen quarters of negative growth - six consecutive quarters of negative growth in the early 80's, and seven consecutive quarters of negative growth in the early 90's.

By contrast we have had no negative quarters in the 11 years of New Labour.

Harry Flashman said...

How many quarters of negative growth have our competitors had in the last 11 years ? not many.

You'll get your negative quarter in Q3 (or once the next Q2 revision comes out)

Harry Flashman said...

How many quarters of negative growth have our competitors had in the last 11 years ? not many.

You'll get your negative quarter in Q3 (or once the next Q2 revision comes out)

Frank said...

Will you also be presenting Bush a medal if he manages to get the US through without any contraction. Your figures suggest that the US' growth is far outstripping the UK, particularly after the ONS downgrade.

Harry Flashman said...

Also of interest

http://www.spectator.co.uk/coffeehouse/1411986/bursting-browns-bubble.thtml

snowflake5 said...

Hary Flashman - our competitors have had plenty of negative growth in the last eleven years. The USA had eight months negative growth in 2001, and the latest US Treasury figures say that they contracted in Q4 2007 too. Japan has been in recession for most of the last decade. Germany was in recession in 2005, as was France and Italy.

Frank - won't be presenting Bush with a medal, as the US treasury now say that they contracted in Q4 2007 (and of course they contracted in 2001 too).