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U K Outstrips Rivals With 3 Per Cent Economic Growth

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UK outstrips rivals with 3 per cent economic growth

" The British economy grew at an annualised rate of 3 per cent in the first quarter of the year, faster than economists had expected, the Office for National Statistics (ONS) said yesterday.

The economy as a whole grew by 0.7 per cent over the first quarter of 2007, the ONS said, outstripping most of the UK's rivals. However, analysts said while the figures suggest the economy is probably growing at above its long-term trend growth rate, it is no longer doing so by any great margin.

A reduction in the savings ratio to 2.1 per cent, a near half-century low, also suggest that households have been running down their savings to help sustain spending levels as their disposable incomes have been pressured by tax increases and higher interest rates.

The ONS said disposable incomes fell 0.3 per cent in the first quarter and a survey by pollsters GfK/NOP also showed consumer confidence slipping. "Weak disposable income and rising rates are a bad combination for consumption and growth later in the second half of the year," said George Buckley, the chief UK economist at Deutsche Bank.

Even so, most economists said the higher-than-expected growth rate would provide further reason for the Bank of England to consider raising the cost of borrowing.

Figures from the Bank of England on mortgage approvals and lending, published yesterday, also suggested a relatively bullish mood in the economy. Consumers added £9.54bn of debt in May alone, taking the total to £1.33 trillion. Economists differ as to the extent to which higher interest rates - now 1 per cent higher than year ago - have affected the property market.

Allan Monks, of JP Morgan, said: "The break in the recent downtrend in approvals casts real doubt that any meaningful downshift in spending is taking place".

Barclays Capital agreed: "We are not seeing clear evidence yet that there has been a discernible moderation in housing market activity," a spokesman said. However, Phillip Shaw, of Investec, was more downbeat. "Evidence on the housing market remains unclear for now, with tentative signs of a slowdown," he warned.

Despite differences of interpretation and a plethora of mixed signals on the economy, the City consensus remains that the Bank's Monetary Policy Committee will raise rates by 0.25 percentage points next Thursday.........."

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13/14% increase in broad money supply and around 10% increase in personal debt to produce 3% GDP growth.

There aren't many words in the english dictionary to describe how awful these stats really are.

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13/14% increase in broad money supply and around 10% increase in personal debt to produce 3% GDP growth.

There aren't many words in the english dictionary to describe how awful these stats really are.

Consumers added £9.54bn of debt in May alone, taking the total to £1.33 trillion.

Thats scary enough!

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IIRC housing is the primary driver of the UK and US GDP. US GDP slowed in Q1 to reflect the realities of a dramatically slowing property market. Reality has yet to break out here to the same extent. In the meantime its spend spend spend....while Gordon stokes up the fires fueling the money supply train to keep all that "growth" moving along. Growth based on debt accumulation will all end in tears very very soon.

Edited by Realistbear

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IIRC housing is the primary driver of the UK and US GDP. US GDP slowed in Q1 to reflect the realities of a dramatically slowing property market. Reality has yet to break out here to the same extent. In the meantime its spend spend spend....while Gordon stokes up the fires fueling the money supply train to keep all that "growth" moving along. Growth based on debt accumulation will all end in tears very very soon.

It certainly is spend, spend, spend if Preston town centre today is anything to go by. Absolutely heaving, even in this crap weather (probably because everyone got paid yesterday).

Edited by dpg50000

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UK outstrips rivals with 3 per cent economic growth

" The British economy grew at an annualised rate of 3 per cent in the first quarter of the year, faster than economists had expected, the Office for National Statistics (ONS) said yesterday.

....did I not read yesterday £50 billion was MEWed in the past year.....we are playing monopoly.............this is not productivity.....to compare with other less personal credit reliant countries is like comparing melting icebergs with forest fires...........

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GDP growth measured in nominal terms, right? In that case we're in a recession, if you subtract inflation from GDP growth. They're getting confused by their own figure now!

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Those who said Q1 2007 was going to be the tipping point seem to be right on the money, not myself.

But with savings gone to a 50 year low, HEW/MEW, unsecured lending with a 10 year high of CCJ's, is that the end of the money supply ?, or am I missing something.

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Hope the defenders of Mervyn King remember that in quarter one GDP was pronounced to be falling back to 2.5% and that preliminary estimates for Q1 were 0.5%.The whole reason they held back on the rates was because of it.I made several posts at that time that GDP was hot and was easily running at 3% annualised and felt I was hitting my head against a brick wall and a s**t BOE model.The incompetence of the MPC and their software knows no bounds.

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GDP growth measured in nominal terms, right? In that case we're in a recession, if you subtract inflation from GDP growth. They're getting confused by their own figure now!

No it isn't. It is actually a net figure. Our nominal growth is over 5% or whatever.

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The economy as a whole grew by 0.7 per cent over the first quarter of 2007, the ONS said, outstripping most of the UK's rivals.

Obviously the ONS doesn't consider Russia and China to be rivals.

Yet.

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i dont think its beyond the bounds of possibility that they could raise rates by .5% next time the boe committee meet.

the governor and deputy have both been very strenous in expressing disappointment that nothings happened yet in terms of reigning in inflation - anyone else think this may happen or would this measure panic everyone?

Edited by littlepumpkin

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anyone else think this may happen or would this measure panic everyone?

A bit of panic would be the best thing they could do; it might well discourage the money supply growth that's forcing them to raise and raise and raise and mean that peak rates would be lower. But IMHO they don't have the balls.

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A bit of panic would be the best thing they could do; it might well discourage the money supply growth that's forcing them to raise and raise and raise and mean that peak rates would be lower. But IMHO they don't have the balls.

as a well-known poster on here used to say "if you're going to panic, panic early"

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