Britain is teetering on the edge of recession

One of Liz Truss’s suggestions on the leadership campaign trail was that her economic agenda could avoid recession. But one of the (many) gambles attached to these comments was what had already happened to the economy before she entered No. 10. This morning we got some more insight about how the economy fared over the summer, as the Office for National Statistics revealed that GDP grew by 0.2 per cent in July: a small uptick, following a 0.6 per cent contraction in June. The small, but still positive, growth was mostly a result of a boost to services industries, which fell by 0.5 per cent in June, with the largest

Is the US in recession or not?

There’s an almighty debate ongoing in the US about what exactly a ‘recession’ is. Treasury secretary Janet Yellen said the US economy is not shrinking, saying it is in a state of ‘transition’, not recession. But in a clip from 2000 being circulated on Twitter that is comically apt, Bill Clinton said ‘a recession is two quarters in a row of negative growth’. Regardless of who’s right, the US is currently in Bill Clinton’s definition of a recession. Figures show that the economy shrank by 0.2 per cent in the second quarter of this year, following a 1.6 per cent fall in the first quarter. Over the year, the US economy is now 0.9

China and the WHO are given an easy ride in the Covid blame game

Are you ready to relive 2020? That’s what Adam Tooze is offering as he tells the story of Covid-19 through the spectacular and terrifying economic consequences created by the global health crisis. For many, the answer will be a simple no. But for others looking to make sense of an utterly surreal year, Shutdown might seem an obvious place to start. Unfortunately, the book offers less analysis and more ranting than would normally be expected from an economic digest — especially one written about one of the most startling shocks to the economy the world has ever seen. Some readers may like the rant. If you’re of the opinion that

Australia shows the cost of zero Covid

The UK is growing at the fastest pace in 80 years. The United States, fuelled by President Biden’s stimulus programme, is expanding at a breath-taking pace, while Sweden is growing at a rapid rate. Most of the global economy is bouncing back from the Covid recession at remarkable speed. There is, however, one exception. Australia. What has long been one of the most successful economies in the world is heading back not just into lockdown but into recession as well — and giving the world a sharp lesson in the cost of ‘zero Covid’. Over the last year, Australia, along with New Zealand, has been heaped with praise for the

Ignore the gloomsters, the economy is roaring back

The horror! Yesterday we discovered that UK economic output — as measured by GDP — fell by 1.6 per cent in the first quarter of the year, 0.1 per cent worse than the 1.5 per cent originally reported. This is practically a rounding error. To put it in context, as recently as March the Office for Budget Responsibility, which crunches the numbers for the Chancellor, was forecasting that GDP would fall by 3.8 per cent in Q1. As well as still beating these gloomy expectations, the latest figures are also old news. But if anything, the detail is encouraging. The downward revision to headline GDP was largely due to a bigger decline

Why aren’t we in a recession?

Well, that’s alright, then — we’re not going to have another recession. True, the Bank of England’s monetary policy committee expects the economy to shrink by 4 per cent in the first quarter of this year — following a fall of 9.9 per cent fall last year, itself the deepest plunge in economic growth in modern times. By the spring, we may have several million unemployed as the furlough scheme comes to an end. Many thousands of businesses could go bust as they run out of money and government help is withdrawn. But at least we won’t be in recession: because that ended last June and now we’re back in

Is Britain heading for the worst economic hit in Europe?

It’s odd to read headlines today saying that the UK has officially entered recession. We’ve known this for months: shops were closed, restaurants shuttered. You couldn’t get a cup of coffee or a haircut, offices were closed and millions furloughed. These were not normal times – but we knew that then, as we know it now. What we didn’t know was how far the economy had contracted, and how much this could be remedied by ending lockdown. The big news today, revealed by official figures released by the Office for National Statistics this morning, starts to answer this. It turns out that our economic hit was one of the hardest

This crisis could be the catalyst for a golden age of British theatre

The arts are in a state of crisis. How often have you heard that before? Well, this time around it happens to be true. In the age of coronavirus, it’s clear that the old way of doing things won’t work any more. Theatres, in particular, have been quick to grasp the bleeding obvious: cramming lots of people into crowded spaces has suddenly become extremely difficult. How do you fill a theatre in an era of social distancing? Short answer: you can’t. The response from theatre practitioners has been fairly predictable. What the theatre needs, they tell us, is more public cash. West End producer Sonia Friedman says that 70 per

The coronavirus crisis reveals the misery of ‘degrowth’

This is an economic horror show. According to YouGov, UK unemployment may have jumped five per cent in a matter of weeks. The consultancy CEBR estimates that global GDP may shrink by twice the rate seen in the Great Recession. This may be the worst hit to British people’s livelihoods since the Great Depression of the 1930s. Except one thing is different: this is a deliberate economic shutdown, made necessary to avoid a deeper, more human one. It isn’t that the economy is failing to work because the credit system has seized up as in 2008. We are actively contracting productive work in order to limit a tragedy. A recession it will

The corona stimulus shows we’ve learned the lessons of the crash

The Bank of England hasn’t wasted time getting in front of the coronavirus, and its actions this morning show how far things have moved from the days of Mervyn King. Perhaps more interesting than the interest rate cut is the Bank’s moves to quickly free up the best part of £200bn of lending capacity for UK businesses, particularly small firms who are entirely reliant on banks for funding. The idea is to create a firebreak, to make sure economic malaise doesn’t lead to businesses failing through lack of working cash flow. Fewer restaurants and hotel customers, a fall in those travelling, and more people working from home will all put pressure on

Is Britain really heading for a Brexit recession?

The sense of excitement among some Remainers is almost palpable. Finally – after three years of waiting – a quarter of negative growth has materialised following all the grim warnings of Brexit-related economic turmoil. The Office of National Statistics (ONS) this morning released its first estimate for economic growth for the second quarter of this year, which has come out at minus 0.2 per cent. That counteracts unexpectedly strong growth in the first quarter of 0.5 per cent. Manufacturing, which shrank by 2.3 per cent, was the worst-performing sector of the economy. The dominant services sector expanded but only just, at 0.1 per cent. Another quarter of negative growth and

Robert Peston

The 2007 financial crash changed all our lives for the worse

It started as displacement activity, my immersion in the market mayhem of the summer of 2007. I was at home looking after my wife Sian Busby and our youngest child. Sian had just been diagnosed with a horrible cancer, and was recovering from radical surgery. She did not want a fuss. And did not want our friends to know the seriousness of what had happened. So in the absence of being able to talk about it, I needed a distraction. So in the study across the hall from where Sian was convalescing, I tried to work out what the hell was happening in global debt markets. What I needed to

Why didn’t the experts warn us about the Remain Recession?

The economy would tank. Trade would collapse. Unemployment would soar, and house prices would sink. In the run-up to the referendum, and in the three years of tortured negotiations about leaving since then, we heard lots of dire warnings about what would happen to the economy if we left the EU. And yet we heard very little from the same experts – the Bank of England, the CBI and so on – about what would happen if we didn’t leave at the end of March. And yet it turns out that the British economy has contracted sharply, not because we left the EU, but because we didn’t leave. We are

If it takes a credit card to live like Kim Kardashian, then so be it

Recent figures around the UK’s credit and debit card debt are startling indeed, with the number of transactions rising to its highest annual rate since 2008. This, paired with the fact that household income has barely changed over the last decade, has left financiers scared that the UK is on the verge of another recession. Some politicians will blame the government for the current situation. They will say that years of ‘austerity’ forced the British public to buy things with money they didn’t have. Though it is true to an extent that cuts have pushed many towards credit, it is not the whole picture. Relaxed attitudes towards lending have to

Crunch time

For anyone considering a career in economic forecasting, the Bank of England’s inflation report for August 2007 ought to be required reading. A graph illustrating its Monetary Policy Committee’s ‘best collective judgment’ of annual economic growth two years ahead is fixed around a central prediction of 2.5 per cent, with extreme boundaries of 0.8 per cent and 4.2 per cent. But after two years, economic growth was running at –5.6 per cent, and the economy had just completed its fifth consecutive quarter of negative growth. The finest minds of Threadneedle Street could not see two years ahead. In this case, the Bank of England could not even see a few

Britain’s borrowing binge – not Brexit – should be the big worry for the Bank of England

So, the Office of National Statistics has confirmed that the economy grew by 0.7 per cent in the last quarter of 2016, and by 1.8 per cent over the course of the year. Can we now please stop worrying about a post-Brexit recession and worry instead about an unsustainable consumer boom fed by interest rates which remain at panic levels. The bad news this morning is that the UK saving ratio – which is an estimate of the percentage of their income which households are saving – has fallen sharply from 5.3 per cent to 3.3 per cent. That takes it lower than it was a decade ago, just before

Today’s GDP figures show the ‘inevitable’ Brexit recession wasn’t so inevitable after all

So now we know. The recession that we were told would be ‘inevitable’ if we voted to leave the EU was not quite so inevitable after all. In fact, it hasn’t happened at all. The Office of National Statistics’ first estimate of economic growth for the third quarter has the economy growing by 0.5 per cent. Though this is just an early estimate and could well be revised – revision upwards or downwards of 0.1 to 0.2 per cent are perfectly normal – it is certainly not indicating a recession, which would be two quarters of negative growth. It is pretty much in line with how the economy was growing

The Treasury dishes up more Brexit fearmongering. Will it work?

It’s now exactly one month until the EU referendum and the Treasury has marked the moment with another economic warning about the consequences of Brexit. The analysis out today claims that walking away from the European Union would kick-start a year-long recession. Brexit would also lower the country’s economic growth down by 3.6 per cent, according to the analysis. Although George Osborne must be nearing the point of running out of words to describe the economic ramifications of Brexit, in an article in the Daily Telegraph, Osborne and Cameron had this to say: ‘It is clear that there would be an immediate and profound shock to our economy. The analysis

Land of the Donald

[audioplayer src=”″ title=”Freddy Gray talks to Isabel Hardman about Donald Trump’s angry America”] Listen [/audioplayer]It was, in the end, the best possible night for Donald Trump. On Super Tuesday, 11 American states voted for Republican and Democratic presidential candidates. Trump won seven. That was enough to ensure he remains easily the frontrunner, but not enough to persuade his opponents to coalesce around one of his rivals. Had he won nine or ten, the Republican party might have fallen in behind the man in second place, Ted Cruz. As it turned out, Marco Rubio, the last establishment man standing, won one state, which has encouraged him to keep fighting. But Rubio’s

Matthew Lynn

The debt monster

Just after last year’s general election, George Osborne delivered a budget that he hailed as proof that his policies were working. ‘The British economy I report on today is fundamentally stronger than it was five years ago,’ he crowed, as he started to detail the record number of jobs created and a growth rate that had accelerated past our neighbours. ‘Our long-term economic plan is working. But the greatest mistake this country could make would be to think all our problems are solved.’ As it turns out, this final sentence summed things up the best. There was growth but a whole lot of debt as well. The national debt today