U K Growth Down 66% In Third Q According To Survey

[Realistbear]

http://www.bloomberg.com/news/2010-10-22/u-k-growth-pace-slowed-to-0-4-in-third-quarter-survey-shows.html

U.K. Growth Pace Probably Slowed to 0.4% in the Third Quarter on Spending

By Jennifer Ryan - Oct 23, 2010 12:01 AM

U.K. economic growth slowed in the third quarter to a third of the pace in the previous three months as consumer spending faltered, a survey of economists showed.

The economy expanded 0.4 percent in the period, down from 1.2 percent growth in the second quarter

, according to the median forecast in a Bloomberg News survey of 35 economists. The Office for National Statistics will publish the data at 9:30 a.m. on Oct. 26.

The GDP report will matter “quite a lot” for the Bank of England’s next decision as officials mull whether to add stimulus, former policy maker Charles Goodhart says. Finance minister George Osborne this week gave details of the biggest fiscal squeeze since World War II, and anticipation of the announcement may have sapped Britons’ confidence.

And the cuts haven't kicked in yet.

[Errol]

I can hear the printing press cranking up already.

[bogbrush]

And the cuts haven't kicked in yet.

Indeed they don't fully kick in for 4 years.

I really don't understand the panic about this, they are piffling in year 1. Quite irrelevent to the macro economy.

[Harold Bishop]

Yep. I'm now convinced we'll get QE2 & continuing near zero interest rates. I also believe the Condems will back down on much of their austerity measures and start stimulus spending. I also think they need to introduce huge incentives to the private sector employers regarding tax and NI holidays. These measures will be in place for the long run and I'm thinking 10 years.

Result: Booming deficit. Sterling down. House prices maintained or slow drift down. Shares & commodities rising. Wage/house price ratio acceptable. Debt paid down and equity restored. Mortgage defaults and repossessions stable or reducing. Bank balance sheets restored.

Non of this is good for a severe HPC.

Edited October 23, 2010 by Harold Bishop

[exiges]

House prices maintained or slow drift down.

I dunno, with new claims of 750,000 jobs going from the public sector and the private sector weakening fast I don't see how prices can be maintained.

[Errol]

Yep. I'm now convinced we'll get QE2 & continuing near zero interest rates. I also believe the Condems will back down on much of their austerity measures and start stimulus spending. I also think they need to introduce huge incentives to the private sector employers regarding tax and NI holidays. These measures will be in place for the long run and I'm thinking 10 years.

Result: Booming deficit. Sterling down. House prices maintained or slow drift down. Shares & commodities rising. Wage/house price ratio acceptable. Debt paid down and equity restored. Mortgage defaults and repossessions stable or reducing. Bank balance sheets restored.

Non of this is good for a severe HPC.

None of it is good for anything.

[General Congreve]

None of it is good for anything.

Price of gold?

[mattyfc]

http://www.bloomberg.com/news/2010-10-22/u-k-growth-pace-slowed-to-0-4-in-third-quarter-survey-shows.html

U.K. Growth Pace Probably Slowed to 0.4% in the Third Quarter on Spending

By Jennifer Ryan - Oct 23, 2010 12:01 AM

U.K. economic growth slowed in the third quarter to a third of the pace in the previous three months as consumer spending faltered, a survey of economists showed.

The economy expanded 0.4 percent in the period, down from 1.2 percent growth in the second quarter

, according to the median forecast in a Bloomberg News survey of 35 economists. The Office for National Statistics will publish the data at 9:30 a.m. on Oct. 26.

The GDP report will matter “quite a lot” for the Bank of England’s next decision as officials mull whether to add stimulus, former policy maker Charles Goodhart says. Finance minister George Osborne this week gave details of the biggest fiscal squeeze since World War II, and anticipation of the announcement may have sapped Britons’ confidence.

And the cuts haven't kicked in yet.

The growth of 1.2% was 100% more than expected. 0.4% Would make it 2% for the year with one quarter remaining, quite respectable and above most forecasts.

Will be interesting to watch what the BOE do. With inflation over target all year, PPI rising and falling sterling. The argument that QE will provide any stimulus to the economy is very tenuous. I think it will generate inflation, but no extra growth. It will probably mean much higher long term interest rates to bring the resulting inflation under control. We seem to have very short memories, only 25 years ago we had double digit interest rates as inflation raged.

I don't see any real risks from the actual "cuts" . Confidence will be the main problem as result of the ludicrous hyperbole that has surrounded them.

The real threats to the economy are potential inflation from short sighted monetary policy and external shocks. The world economy is still incredibly unbalanced, in Asia, The USA and Europe there are major structural issues that have not been addressed. There is a big risk of one of the problems exploding and severely damaging world trade and the economy. To grow long term we need a strong worldwide economy and I don't think we will get it.