Tuesday, August 28, 2012

Two Pieces of Good News in British Economy – The Decline Was Not as Severe as First Thought and

And The Really Good News, They Have Something Other Than Conservative Government Policy to Blame it On

They have released revised economic statistics in Britain for the second quarter and there is good news.  Well good news if one considers it good news when the economy declines but not as much as originally thought.

Britain’s economy has shrunk less than had been reported in the second quarter, but the message from the latest data is one of downbeat households and businesses that are unwilling to spend.

On Friday, the Office for National Statistics reported that gross domestic product in the three months to June fell 0.5 per cent quarter on quarter, in line with economists’ expectations and statements from the ONS signalling an upward revision. The ONS had initially reported a GDP contraction of 0.7 per cent in that period.

UK economy

It turns out that Britain apparently had an extra holiday during the quarter.  Why is that important?  Because that extra holiday can take the blame for the economic fall.

The ONS said the poor weather and the unusual pattern of holidays, for the Queen’s diamond jubilee, may be responsible for some of the decline in GDP.

Vicky Redwood, an economist at Capital Economics, said: “The extra bank holiday in June probably accounted for all of the fall in GDP. But even without that, underlying output did no better than stagnate. GDP is still 1.1 per cent below its level at the start of the recent dip and 4.3 per cent below its peak in 2008.”

And what about the third quarter, the current one.  Well Britain is fortunate enough to have the Olympics.  If growth is negative the Olympics can be blamed.  If it is positive the government can take the credit. 

No wonder everyone in Britain loved the Olympics.  

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