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Ft - "real" Economy Performing Very Strongly

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http://www.ft.com/cms/s/0/843f9628-5220-11...00779fd2ac.html

The British economy entered the recent financial storm in rude health, official figures confirmed on Friday, with growth at 0.8 per cent in the second quarter and 3 per cent year on year.

The rate of growth was unrevised from the Office for National Statistics’ preliminary estimate a month ago, but the release is important as the statisticians now have much more evidence on which to base their estimates.

Normally, such a rate of growth would spur the Bank of England to increase interest rates as it suggests the economy is growing faster than the rate most economists think is sustainable without rising inflation.

Vicky Redwood of Capital Economics said the data suggests “there is plenty of momentum in the real economy to help it deal with any fallout from the financial market crisis”.

But analysts are increasingly convinced that the Bank will now sit on its hands for some time before changing rates again.

They argue the bank will want to wait to see the emerging impact of its five rate rises since last August, the development of inflation which has fallen below the Bank’s 2 per cent target, and the short-run impact of the recent financial turmoil on the economy.

The ONS, for example, estimates that business and financial services expanded at the cracking pace of 1.5 per cent in the second quarter alone, something that could be hit hard if elements of the City’s business remain gummed up for a prolonged period. Financial intermediation, some 8 per cent of the UK economy, grew at the even faster rate of 2.3 per cent in the second quarter and by 10.5 per cent compared with a year earlier.

Sarah Bloomfield of the Centre for Economics and Business Research said she thought financial services “may fall in the third quarter of 2007 amidst troubles in the financial markets”.

The second release of the GDP figures gives the balance of expenditure in the economy. It shows that between April and June households continued to spend merrily even though interest rates were rising rapidly. The quarterly rate of growth of household expenditure of 0.8 per cent was faster than in the previous three quarters.

But investment was weak with a fall of 1.1 per cent, dragged down by falling business investment. Since the business surveys of investment intentions have been extremely strong of late, this figure is a puzzle and will reinforce the Bank of England’s view that these figures are likely to be revised higher.

Past form suggests that as the ONS learns more about new and growing companies, expenditure patterns and peoples’ incomes in the months and years to come, UK GDP is revised up. While the UK’s initial GDP estimates are unremittingly pessimistic, for example, those in the US are far too optimistic.

In its August inflation report, the Bank of England broke with precedent and said that it thought the economy grew by more than 3.5 per cent in the second quarter compared with the same period a year earlier, rather than the current official figure of 3 per cent, published by the ONS today (Friday).

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http://www.ft.com/cms/s/0/843f9628-5220-11...00779fd2ac.html

Sarah Bloomfield of the Centre for Economics and Business Research said she thought financial services “may fall in the third quarter of 2007 amidst troubles in the financial markets”.

......this is not psychic magic....any bar room in the country could have told her that one.... :P:lol::lol:

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OK aside form a few bombs and pharmaceuticals

WHAT IS THE REAL ECONOMY OF THE UK?

WHAT ARE WE TRADING WITH THE WORLD THAT THEY CAN'T GET ENOUGH OF?

MOST OF THE PEOPLE I KNOW DON'T HAVE JOBS THAT EITHER ADD VALUE OR CREATE EXPORT WEALTH

WHAT IS THE SECRET RECIPE?

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OK aside form a few bombs and pharmaceuticals

WHAT IS THE REAL ECONOMY OF THE UK?

WHAT ARE WE TRADING WITH THE WORLD THAT THEY CAN'T GET ENOUGH OF?

MOST OF THE PEOPLE I KNOW DON'T HAVE JOBS THAT EITHER ADD VALUE OR CREATE EXPORT WEALTH

WHAT IS THE SECRET RECIPE?

...start of a list would be oil, machinery, pump equipment, whisky, gin, fashion, up market clothing, Mini (BMW) Land Rovers, Arms, Tanks etc insurance and other financial invisibles, lea and perrins sauce, beer, mustard (Colmans) etc etc.... :rolleyes::rolleyes::rolleyes:

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...start of a list would be oil, machinery, pump equipment, whisky, gin, fashion, up market clothing, Mini (BMW) Land Rovers, Arms, Tanks etc insurance and other financial invisibles, lea and perrins sauce, beer, mustard (Colmans) etc etc.... :rolleyes::rolleyes::rolleyes:

I wish

net importers of oil

germany and Japan make machinery

fashion made in China

Beer made in Denmark

Financials to become even more invisible

THANK GOD FOR COLEMANS AND LEA AND PERRINS

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Guest DissipatedYouthIsValuable
I wish

net importers of oil

germany and Japan make machinery

fashion made in China

Beer made in Denmark

Financials to become even more invisible

THANK GOD FOR COLEMANS AND LEA AND PERRINS

If those Frenchies ever catch on to making their mustard a bit more yellow, I think we could be in trouble.

Edited by DissipatedYouthIsValuable

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OK aside form a few bombs and pharmaceuticals

WHAT IS THE REAL ECONOMY OF THE UK?

WHAT ARE WE TRADING WITH THE WORLD THAT THEY CAN'T GET ENOUGH OF?

Drizzle, hypocrisy, resistors to make your car go faster, chavs and fluff.

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Drizzle, hypocrisy, resistors to make your car go faster, chavs and fluff.

PROBLEM OVER i'M GOING TO INVEST LOTS OF MY SAVINGS IN THE "REAL" ECONOMY AS IT SEEMS SO MUCH MORE RESILIENT THAN ONE OF THOSE DIRTY REAL ECOMOMIES LIKE THE GERMANS OR JAPANESE HAVE.

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I wish

net importers of oil

germany and Japan make machinery

fashion made in China

Beer made in Denmark

Financials to become even more invisible

THANK GOD FOR COLEMANS AND LEA AND PERRINS

.....don't get too depressed....we need to be in markets where we are not the sole provider....when I worked overseas believe me it was a pleasant sight coming across remote villages whose stores always were stacked with things like Colmans mustard, and Cadbury's chocolate..Carr's water biscuits etc etc .....remember the glass is never half empty....always half full...!.....oil exports help to reduce an over extended net import position ...and we were talking exports..... :P:lol::lol:

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OK aside form a few bombs and pharmaceuticals

WHAT IS THE REAL ECONOMY OF THE UK?

WHAT ARE WE TRADING WITH THE WORLD THAT THEY CAN'T GET ENOUGH OF?

MOST OF THE PEOPLE I KNOW DON'T HAVE JOBS THAT EITHER ADD VALUE OR CREATE EXPORT WEALTH

WHAT IS THE SECRET RECIPE?

Erm...celebrity magazines...? :unsure:

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If those Frenchies ever catch on to making their mustard a bit more yellow, I think we could be in trouble.

Don't the French own Coleman's Mustard anyway ? (Danone group ?)

Why kill the goose that lays the golden egg. Just keep taking the profits.............. ;)

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If the 'real' economy was solely based on 'real' money I would say, OK, don't worry about the funny money market. Unfortunately, I can't say that because everyone in the real economy is using the funny money. Therefore, I fear the worst.

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Guest DissipatedYouthIsValuable
Don't the French own Coleman's Mustard anyway ? (Danone group ?)

Why kill the goose that lays the golden egg. Just keep taking the profits.............. ;)

Bloody French. That explains why it's not as robust in flavour as it used to be, and with a hint of garlic.

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Guest DissipatedYouthIsValuable
If the 'real' economy was solely based on 'real' money I would say, OK, don't worry about the funny money market. Unfortunately, I can't say that because everyone in the real economy is using the funny money. Therefore, I fear the worst.

You're going to be so screwed when we move to the Palladium standard

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Guest DissipatedYouthIsValuable
You think? Hmmm... maybe! :lol:

Catalysis, hydrogen absorption, nuclear fusion.

Palladium is the future.

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Beer made in Denmark

You ought to read the label on your beer more carefully. Much of the foreign sounding lager is actually brewed in the UK under license, even the supposedly Indian beers sold in curry houses. The economics of brewing always give the home producers a huge edge because transport is usually one of the biggest costs.

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