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23rd June 2017
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Soapbox: One swallow does not make a Summer
Robin Chater, the Secretary-General of the Federation of European Employers, comments on the latest UK GDP figures...
The UK's Office for National Statistics has just published GDP figures for Q3 2012. Although these show the UK economy to have officially grown by 1% since Q2 2012 little can be assumed from a single statistic and the continued decline of the construction sector indicates that the underlying economic condition of the UK remains very weak.
A close analysis of the latest GDP figures published by the UK's Office for National Statistics reveals that although GDP for the whole of the economy has grown by 1% between Q2 and Q3 2012, the economy did not grow at all over the year to Q3 2012. There is every reason to doubt that the latest quarterly change amounts to a significant trend event and may simply be a reajustment following a decline in GDP of 0.3% and 0.4% in the previous two quarters.
Some positive components in the index are also unlikely to have any relevance to an economic upturn. For instance, 'water supply, sewage etc' rose by 4.1% and 'government & other services' grew by 1.6% over the latest quarter - neither of which will excite the Bank of England. Conversely, there is every reason to be concerned about the continued contraction of the construction sector. Construction output decreased by 10.8% between Q3 2011 and Q3 2012 and by 2.5% between Q2 and Q3 2012.
The UK government may well take heart from the latest GDP figure, but for the production sector this is little more than a possible temporary respite. Although the production sector grew by 1.1% in the last quarter, the change has come on the back of declines for each of the previous six quarters. We shall need at least two more quarters at similar growth levels even to get back to the position at the beginning of 2011."
The Federation of European Employers is the leading organisation for major employers operating across Europe. Although originally founded with financial assistance from the European Commission, it operates today as an independent support organisation and think tank with corporate members all over the world. It is currently chaired by Ford Europe.
26th October 2012