In his Autumn Statement on 3 December, the Chancellor presented “a forecast that shows the UK is the fastest-growing of any major advanced economy in the world”. He boasted: “A year ago, we expected GDP to grow by 2.4 per cent. In March we expected 2.7 per cent. Today, the British economy is forecast to grow by 3 per cent… And the growth we are now seeing is more balanced. Manufacturing is growing faster than any other sector; and investment is set to be up 11 per cent this year.” Now all of those claims are in tatters, writes David Blanchflower in The Independent.
Growth in the most recent quarter was left unrevised at 0.7 per cent, but growth in each of the previous three quarters was revised down by 0.1 per cent, and the two before that were revised down by 0.2 per cent each. For the Chancellor’s claim that growth in 2014 will be 3 per cent to be true, it requires growth in the fourth quarter of 2.2 per cent, which, of course, won’t happen. So bang goes that claim.
On the same day as the downward GDP revisions for the UK there were upward revisions in the US to an annualised five per cent [making that the fastest-growing advanced economy instead of the UK].
Manufacturing growth has slowed sharply, down from 1.1 per cent in the first quarter of 2014, to 0.5 per cent in Q2, to 0.3 per cent in Q3. Services grew by 0.8 per cent, so manufacturing isn’t growing faster than any other sector.
There were also downward revisions to business investment. The trade balance deficit widened from £10.9bn in Q2 2014 to £11.8bn in Q3 2014, and as a result the UK’s current account was in deficit by £27bn in the July to September quarter. At 6 per cent of gross domestic product, the current account deficit is now higher than it was at the end of the 1980s, its previous peak.
There’s more detail in the article – give it a visit – but it’s clear from the above that George Osborne’s Autumn Statement claims were nothing but hot air, providing cold comfort in the run-up to the General Election.
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