ONS blames Wills and Kate for flat growth

GDP figures out this morning show growth has essentially plateaued. And the ONS has chosen to blame the 'extra bank holiday'...

by Emma Haslett
Last Updated: 06 Nov 2012

The good news: over the last three months, the economy has grown: by 0.2%, to be exact. That’s in comparison to the 0.5% growth reported during the previous quarter – and the 0.5% contraction shown in the quarter before that. Which, essentially, means growth has been almost flat over the last three quarters (otherwise known as ‘the bad news’, not least for the Government, which had hoped for something a little more encouraging). Then again, the Office for National Statistics, which released the figures this morning, was keen to point out that had it not been for a few ‘special events’, growth would actually have hit 0.7% this quarter. Every cloud, and all that…

Of course, as one Twitter-ite put it today, if the Government is going to use that excuse, the ONS should start publishing two releases: one for the real world and one for ‘if bad stuff hadn’t happened’. Nevertheless, those one-off factors were pretty substantial, including the Japanese earthquake and tsunami, which hit manufacturing ouput, and warm weather, which affected the amount of gas and electricity consumers used. The extra bank holiday was the big one, though: apparently it ‘kept many shops and factories closed’.

All in all, the figures don’t make for pleasant reading: output in the services sector rose by 0.5% - which looks fine, until you compare it with the 0.9% by which it rose during the previous quarter. And total production output fell by a rather substantial 1.4%, compared to a 0.1% drop in the previous quarter. Within that, manufacturing output fell by 0.3% against a 0.7% rise in Q1 (doesn’t bode well for the Government’s insistence on a Made In Britain revival, does it?). Construction was the one bright spot, growing by 0.5% - although that is after a 3.4% fall during the first quarter, so it has yet to recover from that properly.

George Osborne was desperately trying to put a positive spin on things: he said the ‘positive news is that the British economy is continuing to grow and is creating jobs’ (although, as economist David Blanchflower pointed out, ‘If Osborne thinks this is ‘positive news’, I’d hate to see his idea of bad news’). He’s certainly got a difficult job on his hands: history suggests that recoveries should accelerate away fairly smoothly, not bump along in first gear for months. He’s now going to come under increasing pressure (not least from his own side in the coalition) to find ways to boost growth, and do it fast. Either way, the flat growth means the chances of an interest rate rise anytime soon are looking slim – in fact, analysts at IHS Global Insight have written the idea of a rate rise off  until as late as ‘mid-2012’.

One interesting point raised by the ONS was around Olympic tickets – namely, that their sale in May raised a cool £300m, or 0.1% of GDP. But the ONS said it won’t add that to GDP figures until next year. MT sees an opportunity here. If the ONS is blaming Wills and Kate for skewing GDP figures, and sporting events like the Olympics have the capacity to add 0.1% to growth figures, it only follows that for the royal family should clean up its own mess by launching 2013 version of It’s A Royal Knockout. Just a thought…

- Image credit: Flickr/katrina.elizabeth

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