To nobody's great surprise (apart from that of a majority of economic forecasters who, for once, were proved right) yesterday's economic growth data release from the Office for National Statistics (ONS) indicated that the UK's recovery from recession is extremely weak. The preliminary estimate for growth in gross domestic product (GDP) in the second quarter of 2011came in at 0.2%. But why was economic growth so poor in Q2 2011?
The ONS suggests that second quarter GDP growth could have come in at 0.7%, had it not been held back by a number of "special events."
These "special events" comprise the following:
The additional bank holiday for the royal wedding; The royal wedding itself; The after-effects of the Japanese tsunami; The first phase of Olympic ticket sales; and Record warm weather in April.ONS stresses that its estimates regarding the impact of these "special events [...] "must be regarded as broad brush and illustrative.
It might be argued that growth in any quarter of any year will always be subject to what Harold Macmillan termed "Events, my dear boy, events."
However, Chris Dillow of Investors Chronicle argues that it might pay to take ONS' views on the impact of these "special events" seriously.
Dillow says that "these one-off factors should, then, cause growth to
bounce back in Q3 and Q4." But Dillow also identifies further factors,
which could serve to constrain growth in the latter half of 2011,
including public spending cuts, rising utility bills and the impact of a
euro area slowdown on UK exports.
And that's before we see what kind of "events, my dear boy, events," the coming months might hold...
And that's before we see what kind of "events, my dear boy, events," the coming months might hold...
| Tweet |
|
| Permalink | Email this |
Comments (2)
Wind back to 2010 and the Beeb and others were selling the Royal Wedding on the basis of it bringing an economic boost to GB.
http://www.bbc.co.uk/news/business-11766777
...and of course George Osborne with his 16 news international meetings has been too busy to do his bit to help revive things, amazing how invisible he's been of late eh?
Posted by Doug Shaw | July 27, 2011 9:10 AM
Posted on July 27, 2011 09:10
Thank you for the comment, Doug. Jolly good points, very well made.
Michael
Posted by Michael Carty
|
July 27, 2011 9:18 AM
Posted on July 27, 2011 09:18