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Economy Shrinks At 1930s Rates

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http://www.telegraph.co.uk/finance/economi...930s-rates.html

The dire state the UK is in emerged on Tuesday as revised figures uncovered the full extent of the country's economic contraction.

The economy shrank by 4.9pc in the year to the first quarter of 2009, the Office for National Statistics said. The fall in gross domestic product was significantly greater than had previously been calculated, as Government statisticians became aware of the full scale of the fall in company activity.

"Clearly this is now the worst peacetime recession since the 1930s," said Michael Saunders, chief UK economist at Citigroup. "The worst contraction then was a year of around -5pc; this year will not be hugely different."

The contraction in GDP during the first quarter alone was 2.4pc, compared with previous estimates of 1.9pc, according to the ONS. This was the biggest one-quarter fall in 35 years.

Moreover, the 4.9pc annual fall was the biggest since Government records began. According to statistics compiled by economic historian Angus Maddison, the contraction was the worst since 1931 – worse than any year during the Second World War and the demobilisation that followed.

The revision was partly the result of a steeper fall in construction and services output than first thought. Economists had predicted a downward revision but not on that scale. The ONS also revealed that the recession started in the second quarter of 2008, a quarter earlier than previously thought.

Simon Hayes of Barclays Capital said that although the figures were historical, they had a direct bearing on future growth. He said: "It reinforces the message that the recent signs of 'green shoots' reflect a rebound from an extraordinarily sharp fall in activity earlier in the year. We continue to be cautious about seeing them as material news about the medium-term growth outlook, which is likely to be hamstrung by tight credit conditions and the need for fiscal consolidation."

Liam Byrne, chief secretary to the Treasury, said it would not be revising its growth forecasts. "There have been some tentative signs that the fall in output is moderating and I remain confident but cautious about the prospects for the economy," he said.

George Osborne, the shadow Chancellor, said: "We hope the recovery comes as soon as possible but sadly we now know this recession has been longer and deeper than we had thought. This also means that in the future unemployment will be higher and Labour's debt crisis will be even worse."

There was better news yesterday from Nationwide, which said that UK house prices rose for the third month out of the last four in June, by 0.9pc to an average of £156,442. House prices were 9.3pc lower than a year ago, marking the slowest rate of annual decline since July last year.

In a further blow for the UK, newly released figures from the International Monetary Fund showed that international investors' enthusiasm for Britain has dimmed further, with a third consecutive decline in the proportion of sterling held by central banks and other institutions.

The green shoots are here.

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Sure, but it's not just a UK problem.

As posted yesterday on another thread, the UK figures are indeed very bad - but in line with the Eurozone and EU Q1 GDP decline.

http://www.eubusiness.com/news-eu/1244023322.42/

We all appear to be declining at the same rate, says a lot about how debt was driving growth.

As I keep saying debt is wealth :P

What's needed is more borrowing to fix this problem and bring growth back with people consuming endless crap they don't need.

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these green shoots are a load of shite

maybe an upturn will be seen with all the government spending but

no sustainable recovery will take place until this has been sorted

total_credit_debt_percentage_gdp.jpg

The graph does clearly suggest that debt has been driving the growth in the global economy for the past 25 years. US growth has clearly been funded by increasing debt.

Anyone got a productivity chart for the US over the same period?

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Sure, but it's not just a UK problem.

As posted yesterday on another thread, the UK figures are indeed very bad - but in line with the Eurozone and EU Q1 GDP decline.

http://www.eubusiness.com/news-eu/1244023322.42/

Thats like saying the situation is equally as bad for someone who owns a fully paid off mansion as someone with five BTL mortgages when they lose their jobs.

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There was better news yesterday from Nationwide, which said that UK house prices rose for the third month out of the last four in June, by 0.9pc to an average of £156,442. House prices were 9.3pc lower than a year ago, marking the slowest rate of annual decline since July last year.

What amazes me is that this is seen as good news during the worst recession since the 1930s. Any rise in house prices is just going to prolong the pain.

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I was reading the Telegraph business section this morning and was struck by just how terrible all the news was.

GDP

Carpetright

Keydata

Arriva

Threshers

WoleslyGala

Airbus

I just cant understand why houses are proving so resilient.

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I was reading the Telegraph business section this morning and was struck by just how terrible all the news was.

GDP

Carpetright

Keydata

Arriva

Threshers

WoleslyGala

Airbus

I just cant understand why houses are proving so resilient.

People need somewhere to live and the alternative investments don't look any safer.

If you have a job and can get a mortgage or are a cash buyer you buy while you still can.

Once youve lost your job or the government has taken your savings you no longer have a choice.

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I was reading the Telegraph business section this morning and was struck by just how terrible all the news was.

GDP

Carpetright

Keydata

Arriva

Threshers

WoleslyGala

Airbus

I just cant understand why houses are proving so resilient.

because you are believing the housing related stats.

I don't.

edited - unprecedented times call for unprecedented lies & manipulation. See confounded's threads on the financial market manipulation for reference.

Edited by grumpy-old-man-returns

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I was reading the Telegraph business section this morning and was struck by just how terrible all the news was.

GDP

Carpetright

Keydata

Arriva

Threshers

WoleslyGala

Airbus

I just cant understand why houses are proving so resilient.

I can think of a few things:

Low IRs

Banks not foreclosing (yet)

Small pockets of buyers in posh areas possibly skewing the still low figures

EAs allowing buyers to the table that haven't even put their properties on the market yet resulting in the appearance of lower supply.

Feel free to add your own. :)

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We're debating ancient history here. The period in question was over months ago.

PMI's are now moving sharply higher.

Consumer confidence is rising not falling.

Unemployment is trending lower than expected.

Industrial production and manufacturing surveys are now positive.

In fact virtually every single piece of economic data suggests the economy is recovering from Q1 lows.

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because you are believing the housing related stats.

I don't.

edited - unprecedented times call for unprecedented lies & manipulation. See confounded's threads on the financial market manipulation for reference.

well I believe them in our area, unpalatable though this is for us. There is certainly more activity.

I don't expect it to last though.

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Almost everywhere in the world become a more efficient place to run a company and employ staff.

High costs (which are being intentionally maintained) and a rapidly reducing skills base. Only good for labour arbitrage - ship in cheap labour and out-compete the locals but charge the same.

http://www.telegraph.co.uk/news/uknews/569...foreigners.html

Seven in 10 new jobs go to foreigners

http://news.stv.tv/scotland/north/105886-u...s-jobs-at-risk/

Up to 50,000 UK oil and gas jobs at risk

http://news.bbc.co.uk/1/hi/england/berkshire/8127678.stm

More jobs cut at telecoms giant

Telecoms giant Nortel has laid off another 150 staff across the UK without redundancy pay

http://www.bdonline.co.uk/story.asp?sectio...0000000019c70d4

Cost cutting could mean more jobs to go at Archial

The chief executive of Archial has admitted more jobs could go at the company in order to save the architectural giant £2 million.

http://www.teletext.co.uk/news/arounduk/70...und+the+UK.aspx

Central Scotland About 900 jobs at drinks giant Diageo are to go under a restructuring that will see its Port Dundas distillery and a packaging plant in Kilmarnock close.

http://www.citywire.co.uk/adviser/-/news/m....aspx?ID=347521

Capita Sipp says 520 jobs 'at risk'

Get up to the minute share prices for UK stocks at Citywire's FTSE Share Prices & Performance zone. Or keep track of the shares and funds that your clients use regularly through Citywire's portfolio tool.

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well I believe them in our area, unpalatable though this is for us. There is certainly more activity.

I don't expect it to last though.

yes, sorry I should have been clearer. I do understand that houses are being sold. I think it's cash holders who have either exited the financial markets or withdrawn savings & are buying hard assets. If they are doing this without a mortgage & have negotiated a decent discount that's probably the best thing that they could do if they have been unprepared/unaware of the current situation.

What I mean is that the stats are being fudged/manipulated.......hence I don't really use them. It's just low volumes that are skewing the figures I would imagine. Also, haven't you noticed that on the way up, hpi is always quoted as up 200% on 5 years ago etc, BUT on the way down it's always compared to the year earlier. Same goes for mortgage applications etc.

The media are almost totally state controlled.

I think we are TOTALLY past house prices now though, this is much, much bigger than that.

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well I believe them in our area, unpalatable though this is for us. There is certainly more activity.

I don't expect it to last though.

My take exactly.

I have no great faith in the figures, but if anything they have been less bullish than what I have been seeing in Oxford. I use the past tense because recently it all seems to be turning around again.

Back in spring, EAs round here were talking about sales being 2-300% up on last year. Now they are boasting of a paltry 15% up YoY.

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My take exactly.

I have no great faith in the figures, but if anything they have been less bullish than what I have been seeing in Oxford. I use the past tense because recently it all seems to be turning around again.

Back in spring, EAs round here were talking about sales being 2-300% up on last year. Now they are boasting of a paltry 15% up YoY.

We put a house on the market near York in April.

Good price for area at about 20% off peak

Lots of interest and almost daily viewings initially but it has now gone dead again and none of the initial viewers made an offer.

Anecdotal I know but the green shoots seem to have had shallow roots

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We put a house on the market near York in April.

Good price for area at about 20% off peak

Lots of interest and almost daily viewings initially but it has now gone dead again and none of the initial viewers made an offer.

Anecdotal I know but the green shoots seem to have had shallow roots

Arm-twisted cash buyers already gone then by the sounds of things. Wonder where else that money could have gone, may have been invested in something productive, not now.

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Arm-twisted cash buyers already gone then by the sounds of things. Wonder where else that money could have gone, may have been invested in something productive, not now.

I agree OnlyMe. If you are struggling near York at 20% off peak, then you are fooked imo.

The baby boomers who had savings &/or stock market monies, have withdrawn & spent the lot imo because of the banking/pension/shares crisis.

what happens next ?

uh oh............

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yes, sorry I should have been clearer. I do understand that houses are being sold. I think it's cash holders who have either exited the financial markets or withdrawn savings & are buying hard assets. If they are doing this without a mortgage & have negotiated a decent discount that's probably the best thing that they could do if they have been unprepared/unaware of the current situation.

What I mean is that the stats are being fudged/manipulated.......hence I don't really use them. It's just low volumes that are skewing the figures I would imagine. Also, haven't you noticed that on the way up, hpi is always quoted as up 200% on 5 years ago etc, BUT on the way down it's always compared to the year earlier. Same goes for mortgage applications etc.

The media are almost totally state controlled.

I think we are TOTALLY past house prices now though, this is much, much bigger than that.

The media just spin the statistics to suit and present the data by choosing suitable time-frames for comparison etc. Here's an example from the BBC:

http://news.bbc.co.uk/1/hi/business/8125728.stm

Yes, I agree it's gone way way beyond house prices. We are starting to see the effects of exponential growth of interest on debt, for both the individual and the country. We have gone from talking in thousands, to millions, to billions, and soon to trillions!

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I was reading the Telegraph business section this morning and was struck by just how terrible all the news was.

GDP

Carpetright

Keydata

Arriva

Threshers

WoleslyGala

Airbus

I just cant understand why houses are proving so resilient.

For many people the notion that their house was "worth" quarter/half a million is the biggest thing ever likely to happen to them in their lives. Many will cling to this delusion until they are dragged along their mewed carpets on their knees by a couple of ballifs and thrown out into the street. There are laughable elements to this tradgedy, but there is going to be a lot of pain and a lot of anger very soon.

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yes, sorry I should have been clearer. I do understand that houses are being sold. I think it's cash holders who have either exited the financial markets or withdrawn savings & are buying hard assets. If they are doing this without a mortgage & have negotiated a decent discount that's probably the best thing that they could do if they have been unprepared/unaware of the current situation.

What I mean is that the stats are being fudged/manipulated.......hence I don't really use them. It's just low volumes that are skewing the figures I would imagine. Also, haven't you noticed that on the way up, hpi is always quoted as up 200% on 5 years ago etc, BUT on the way down it's always compared to the year earlier. Same goes for mortgage applications etc.

The media are almost totally state controlled.

I think we are TOTALLY past house prices now though, this is much, much bigger than that.

Well having looked at RM for the last few weeks, I am now in agreement with Timm ad dr ray, and I reckon the bull trap/Dead Cat Bounce is pretty much over in Esher.

A fair number of houses coming to the market, no longer priced at 2007 levels, and not sold in the 10 days that they had been since about March/April time.

I agree generally about the figures, but they are what they are. I don't think for instance that Haliwide quite believe them either from reading their press releases. :lol:

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I agree OnlyMe. If you are struggling near York at 20% off peak, then you are fooked imo.

The baby boomers who had savings &/or stock market monies, have withdrawn & spent the lot imo because of the banking/pension/shares crisis.

what happens next ?

uh oh............

No money for pensions, the debt/housing bubble has consumed the lot. It has consumed the money that would have been invested in business too. Just how many new businesses are going to be started by a generation financially obliterated by their mortgage (and tax) commitments - pitifully few. Economic nihilism.

Capita Sipps could shed 520 jobs

Tracey Scott - 01-Jul-2009

Capita Self Invested Pensions has warned staff that 520 jobs are at risk in its Salisbury and Mumbai operations.

The potential job cuts come as part of an internal consultation, which started yesterday.

Edited by OnlyMe

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