MAGGIE PAGANO: Chancellor praises public over GDP figures
MAGGIE PAGANO: Chancellor welcomes GDP figures by praising public, with bounce back as ‘proof of their strength and determination’
The latest GDP figures showing the economy returned to pre-pandemic levels in November suggest that the recovery this year will be much better than most economists had predicted.
November’s numbers, with growth of 0.9 percent, beat just about all forecasts, with manufacturing improving across the economy and construction and retail performing well.
Put in context, this means the economy was 0.7 percent larger in November than in February 2020. These are all great signs that life is returning to normal, although the tightening of Covid restrictions in December, coupled with staff absences and supply chain problems may have slowed growth over the Christmas month.
On maneuvers?: Rishi Sunak would welcome GDP figures by praising the public, saying the rebound was ‘a testament to the courage and determination of the British people’
But the gloom may be exaggerated. As some of the latest business results have shown, December may not be as bad as the more pessimistic economists claim. Indeed, the ONS data suggests that growth is most likely to reach – or even exceed – pre-Covid levels in the last quarter of 2021, as long as economic output does not fall by more than 0.2 percent in December. .
Whether this growth can be sustained in the coming months is another matter. Ongoing restrictions, rising energy bills and higher taxes due in April could falter the recovery.
But on the other side of the equation, the UK has one of the strongest job markets in the world, business investment is on the rise and there are faint signs that inflation may have peaked at 5 per cent.
As the OECD recently forecast, the UK is on track to become the fastest growing economy of the G7 countries this year at 4.9 percent, as long as supply chain problems and labor shortages do not worsen.
By contrast, the latest figures from Germany show that the country was hit hard by the Omicron wave, which led to draconian restrictions. The economy suffered from rising inflation and ongoing supply chain problems, with GDP falling 0.5 percent in the last quarter. If you look at the early full-year estimates of 2.7 percent growth for last year, Germany is now the weakest economy in the G7. It’s no surprise that Rishi Sunak sounded so relieved to hear the latest numbers yesterday. Seeing sterling return to its highest level against a trade-weighted basket of currencies since the Brexit vote in June 2016 will also cheer him up.
What was interesting was how quickly the Chancellor welcomed the numbers by praising the public and saying the backlash was “a testament to the courage and determination of the British people.”
He was right, and it was a much better acknowledgment of the country’s animal spirits than politicians’ patronizing jokes about hard-working people. Sunak is clearly doing maneuvers.
Defending the Empire can be a costly affair, but it’s one that benefits in more ways than one.
Research commissioned by BAE Systems showed that the defense group – which has more than 50 sites across the country – supported 143,000 jobs in 2020 and contributed more than £10 billion to GDP, equivalent to 0.5 percent of the economy. More than 40 percent of employees are based in the most disadvantaged local authorities, communities in which BAE invests more than £700 million. Or you could call it upgrading. Two-thirds of workers are in highly skilled technical positions with an average productivity of £83,000 per worker, about 17 per cent higher than the manufacturing average and nearly 30 per cent higher than the average.
In 2020, BAE invested £93 million in skills and training for 2,000 apprentices and nearly 600 graduates. This year alone, BAE will recruit 1,700 students and graduates.
BAE’s inquiry should be sent directly to Michael Gove – who will publish his long-awaited report on leveling – and Finance Minister Kwasi Kwarteng. There are two lessons for them to take with them. The private sector is by far the best mechanism for distributing wealth, while the defense industry is so valuable to the economy that British defense companies should not be swallowed up by private equity or foreign buyers. The Blue Prism acquisition comes to mind.
Nicola Sturgeon may have slowed down the Scots over the Christmas period, but Glasgow-based high fashion retailer Quiz still managed to celebrate.
Until the tightening of restrictions, Quiz saw sales rise by a fifth, and did well in stores and online. Good to know that women in the four countries still dress up for parties – legal, at least.