The Office for National Statistics’ preliminary figures for Q4 growth, released a
few weeks ago, were a curious beast. They they were, suggesting that
because of a snow-laden December our economy had started shrinking again, to the tune of -0.5 per cent. And yet so many other indicators were doing rather nicely: from activity in the services sector to the Exchequer’s tax take. Many people, myself included, suspected
it was only a matter of time before the ONS revised that -0.5 figure into more positive territory.
Now time has passed, and the ONS has just revised the Q4 figure downwards, not upwards. Their preliminary figure wasn’t quite right, they say. It should have been -0.6 per cent. Given that the snow was thought to reduce GDP growth by 0.5 per cent, that presumably means that GDP shrank by 0.1 per cent even without the uncooperative weather. Hardly encouraging, to say the least.
To a large extent, though, this revision doesn’t change a thing – not least because it is only a 0.1 point difference from the original estimate. What matters more are the forthcoming figures for Q1 of this year. They will show us whether Q4 was a one-off blip, or the beginning of a slide into double dip. In the meantime, the consensus view is still for overall growth of around 2 per cent this year, and other indicators are still ticking along favourably. On the negative side, however, there are the economic tremors arising out of the Middle East, and all while British people struggle against ever higher prices in the shops and on the forecourts.
What today’s figures might alter, though, is the political mood music. Labour will no doubt chirp and boast about them, perhaps blaming the situation – disingenuously, natch – on the cuts. The Bank of England will probably be less inclined to start increasing interest rates. And there will be even more pressure on George Osborne to talk growth in his Budget. Oh well, no-one ever said that recovery would be easy.
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