Growth and the British Economy
By Andrew White
The City Future blog has taken a bit of a hiatus over the summer coinciding with the parliamentary recess. Although parliament has returned in the worst of circumstances, being recalled to debate whether Britain should go to war for the second time in little over two years, this blog is primarily focussed mainly on finance and economics so we will leave the debate about the merits of war elsewhere.
Being as this is the beginning of the parliamentary year this is a perfect time to take stock, see how far we’ve come, and make ourselves hostages to fortune by making predictions about the future. It seems that the British economy is improving reasonably strongly. Growth for the second quarter of the year was revised up to 0.7%, the OECD raised their forecast for the British economy this year, with the best news being that the growth was quite even unlike in the recent past. All the four main sectors of the economy expanded with exports rising 3.6% over 3 months. Manufactures outputs have expanded with their output index hitting its highest level for almost 20 years and their order books reaching a record high according to the Markit/PMI survey.
People are finding jobs again with 29.78m people in work, a rise of 69,000 on the quarter and more than 300,000 on the year. This brought the number of people in work to almost 250,000 more than at the start of the recession as well as the numbers of people living in a household where nobody works has fallen to a record low. Even wages have started to rise again increasing by 2.4% in Q2 2013, the fastest its grown since 2000.
It is also worth pointing out, being as this is a blog aimed at the City, that the index of services output is up 2.8 % in June 2013 over June 2012, with business services & finance growing fasts, contributing 1.1 percentage points to total growth.
There is still a very long way to go, the budget deficit is still at what used to be an eye watering 7.4% however this is still a large drop from the 12.4% it was in 2009/10. Unemployment is still a problem remaining stubbornly over 2.5 million in terms of the ILO’s measure. James Tarbit in next week’s blog also raises some questions the business community still has about British politics and the economy.
It remains the case however that most economic indicators are now, at last, moving in the right direction. Just as importantly interest rates remain low, which was always the main aim of Osborne’s economic policy. With this monetary stimulus still in place, signs of growth from the British economy, and steady improvement in the fiscal position the worst may be over and the view from the end of this parliamentary year may look very different.