February 13, 2023 - 7:49am
Recently, the ONS published its first quarterly estimate for the end of 2022. It was significant because there were fears that the data might show a recession in Britain. The previous quarter had registered very slight negative growth, so if this latest release had shown something similar, Britain would have been considered to be in a recession. Instead, the latest figures showed that the economy had narrowly avoided one.
If that’s the case, then what can be said about the state of the British economy?
For one, the economy has been stagnant for some time. It has still not quite managed to grow back to its pre-pandemic size, while Britain has been far underperforming its peers: IMF data shows that the country has had the worst two years of any major economy.
One clue as to why this might be is in the employment figures. Between the third quarter of 2019 (just before the lockdowns), and the third quarter of 2022, the number of people in employment was roughly flat. But there were also plenty of shakeups between sectors. Indeed, the information and communications sector grew 25% while public administration, defence, and social security has expanded by 22%. Agriculture, forestry and fishing declined the most at -30% with wholesale and retail coming second at -13%. Manufacturing has also fallen by around -11%.
Turning to look at regional growth, these trends make more sense. The chart below shows GDP growth by region for the first and second quarters last year. As we see, only London and the east of England have been reliably growing. Given its relative size, it is fair to say that London is currently driving Britain’s economic growth.
Although we do not have third and fourth quarter regional growth figures, it appears as though most of the country is already in recession, with London being the exception.
The recent employment figures also explain some of the stagnation. The jobs added in information and communications are likely disproportionately located in London, but those added in public administration are not. Meanwhile, the high street appears to be in decline, as does agriculture and manufacturing.
Soon we will probably get a recession in Britain and attention will focus on that. Yet the current statistics point to much deeper problems than a simple cyclical downturn, after which the economy would get back on track. All signs point to chronic stagnation. Policymakers had better figure out a strategy soon or this could end up being a very long recession indeed.
Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics
philippilk
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
SubscribeI’d wager most of the country has been in recession for years. London has always powered the rest of the nation, it has hoovered most of the development money for as long as I can remember. The reason the whole levelling up agenda proved such a vote winner is because all those towns and cities that have been neglected for decades thought they’d finally receive some investment, alas it wasn’t to be
Yes, they fell for that one, hook line and sinker. Suckers.
I enjoy ‘Moving Home With Charlie’ on Youtube because he has the same theory on UK housing I do – – – -35% Minus 35% is his prediction, I say it could go further, but a good figure, depending…
But either way, Charlie is very pleasant to listen to, and if you are buying or selling you need to invest a few hours in his programs – it is a Must if you are active in thee market.
But anyway he had a talk with some finance friend who totally debunks UK GDP – a masterly job of it. The outstanding fact is EVERY House, owned outright or rented – is assigned market rent, even if it is lived in free, and that £Trillion + is part of GDP. Then crime profits estimated – AND ADDED IN TOO! haha…gdp – haha…..Here is Charlie speaking to his friend on GDP. This guy does not understand CBDC, like the writer here he fails to get what it means to have them come about – it is Much Bigger, it fundamentally ends the entire meaning of money, what it is,. how it is created, how it is retired (‘sent to money heaven’ is the actual finance term for that – as money is created by being Loaned into existence, it goes to money heaven as the loan is repaid), and much more…
Any – watch Charlie and his friend, it is fun, learn how GDP is a chimera…
https://www.youtube.com/watch?v=zNzFabjAais
(one of the many reasons government keeps real estate high)
(one of the many reasons government keeps real estate high)
Yes, they fell for that one, hook line and sinker. Suckers.
I enjoy ‘Moving Home With Charlie’ on Youtube because he has the same theory on UK housing I do – – – -35% Minus 35% is his prediction, I say it could go further, but a good figure, depending…
But either way, Charlie is very pleasant to listen to, and if you are buying or selling you need to invest a few hours in his programs – it is a Must if you are active in thee market.
But anyway he had a talk with some finance friend who totally debunks UK GDP – a masterly job of it. The outstanding fact is EVERY House, owned outright or rented – is assigned market rent, even if it is lived in free, and that £Trillion + is part of GDP. Then crime profits estimated – AND ADDED IN TOO! haha…gdp – haha…..Here is Charlie speaking to his friend on GDP. This guy does not understand CBDC, like the writer here he fails to get what it means to have them come about – it is Much Bigger, it fundamentally ends the entire meaning of money, what it is,. how it is created, how it is retired (‘sent to money heaven’ is the actual finance term for that – as money is created by being Loaned into existence, it goes to money heaven as the loan is repaid), and much more…
Any – watch Charlie and his friend, it is fun, learn how GDP is a chimera…
https://www.youtube.com/watch?v=zNzFabjAais
I’d wager most of the country has been in recession for years. London has always powered the rest of the nation, it has hoovered most of the development money for as long as I can remember. The reason the whole levelling up agenda proved such a vote winner is because all those towns and cities that have been neglected for decades thought they’d finally receive some investment, alas it wasn’t to be
Britain outperformed France and Germany from 2013- 2019
UK – 2.1% annual growth
France – 1.4% annual growth
Germany 1.5% annual growth
For the second year in a row we have had the highest annual growth in the G7.
2022:
UK 4.0%
Italy 3.9%
Canada 3.8%
France 2.6%
USA 2.1%
Germany 1.8%
Japan 1.7%
There are major public sector strikes going on in France and Germany.
The unemployment rate in the UK is half that of France and the participation rate much higher.
Wage growth in the UK has far outstripped France and Germany which means the cost-of-living in those countries has become more expensive faster than in ours.
Quite. A lot of reporting here simply lacks any context and seems to be driven by an agenda of trying to “prove” that the UK is worse than anywhere else. Though curiously migrants seem to reject the greener grass countries they pass through on the way here. But a lot of people seem to believe that the UK is both the worst country in Europe and that we are “a wealthy country that should do more for ‘migrants'”. Without being aware of any contradiction.
I barely listen to the BBC any more. Last night a supposedly neutral reporter – Carolyn Quinn – on Radio 4 sarcastically described Rishi Sunak’s goal to improve the UK economy in a particularly sneering tone as though it were an impossible task for him. Though doubtless not for other parties that she would prefer to be in power.
Exactly right.
I must say you do better than me with the BBC Peter.
I haven’t watched, listened to or read any of its output for the last couple of years. Same for Sky and ITV and, what we used to call, the serious newspapers.
I find that a few selected news outlets – UnHerd and The Spectator essentially – keep me well enough informed.
I like to look at the actual numbers on economics rather than their presentation by journalists pushing an (anti-British) angle. I recommend Trading Economics if you don’t use it already.
As for entertainment, mainstream TV seems to be little more than an excuse for woke lectures and token casting. Best avoided at all costs.
Your figures seem spurious MM (can’t find anything anywhere close to those you’ve quoted after a decent search), but others already covered that.
I suspect though you do yourself a disservice limiting your exposure to publications that resonate with your own biases. I enjoy Spectator too (esp Podcast), even though often not representative of my views and values. It’s a test of neuronal muscle fibre to expose oneself to other views and rarely does it leave one entirely unchanged. Recommended.
As regards the article – there is some evidence that North of England receives one of the lowest regional levels of investment in the whole of Europe. The UK is pretty poor overall more recently too and slid right down the investment table, but the North is especially deprived on this score. ‘Levelling up’? Hmm a bit of a sick joke isn’t it.
Spurious?
The Full year GDP growth figures for 2022 the G7 countries are available anywhere. The UK was the fastest growing economy over 2022. As it was in 2021.
The breakdown for the years between the GFC and Covid: 2013-2019 are as follows
UK, 2013: 1.9%, 2014: 3%, 2015: 2.6%, 2016: 2.3%, 2017: 2.1%, 2018: 1.7%, 2019: 1.7%
France (same years) 0.6%, 1%, 1.1%, 1.1%, 2.3%, 1.9%, 1.8%
Germany (same years) 0.4%, 2.2%, 1.5%, 2.3%, 2.7%, 1%, 1.1%
The jobless rate in France is 7.3%, in UK is 3.7%.
Comparative wage growth figure are harder to come by – at least for me – as different governments report them differently.
Last report from UK was 6.4% wage growth in November (to £629 per week) which adjusted for inflation was -2.7% decrease.
Germany last reported figures in Sept 22 and they report as Real Wage Growth (which I take to be the same thing as “inflation adjusted”) of -5.7%.
France reported the quarter to Sept 22 as 0.9% growth but I don’t think this was inflation adjusted “real” wage growth. In fact this doesn’t seem to be a stat that the French publish that often and they have gaps in their historical reporting.
As to your advice on different media sources, noted, though I find life is too short for reading and watching things that annoy me. But good luck to you if you and your neuronal muscle fibre if you think otherwise.
In terms of levelling up, I think the natural movement of people from the South East to the rest of the country driven by house prices differentials and the move to remote working is going to do this without some grand government scheme.
Though if they got on with fracking, we could see a nice boom in Lancashire as well.
You’ve not referenced any source for your data, but regardless alot of the years you quote are pre-Brexit, which I would advise you don’t use to support your positions.
You don’t mention the poor comparison in investment which is what is going to make the difference going forward. Why might this have happened to the UK? You make no suggestions on levelling up other than some vague hope southerners will move north for cheaper housing. Not quite what Northerners will have assumed was meant by levelling up I would contend. And then a hope fracking comes as a saviour to some parts of the North. It’s hardly a rebalanced industrial policy is it? No wonder they are flipping away from the lies they were told.
All figures can be found for free on Trading Economics which lists the sources. Generally they are ONS or foreign equivalent.
Re: Brexit, we have had the highest GDP growth in the G7 since we left the transition period on Dec 31st 2020. Personally I think it is too early to look for the economic effects of Brexit (aside from the obvious repudiation of the claims of an economic hit if we left the EU).
It seems to me self-evident that having secured a full FTA with the EU we now have the best of both worlds: we can trade pretty much as we have since we joined the Common Market with our European neighbours whilst also setting our own immigration, trade, agriculture, environmental, regulatory and tax policies. We are free to sign trade deals with other countries and to select the type and number of people we welcome to live in the UK as our needs dictate.
How wisely we use these freedoms is up to the people of this country and the representatives we elect. So far, the distractions of Covid and war and inflation have meant that we haven’t really started to have those conversations. But I’m sure we will in time.
As to regional investment. I’m sure things could be done better but i don’t really think that government schemes are the way to grow the northern economy – beyond obvious things like roads and rail building and energy and mining permits. But if a party comes up with a good proposal, i’m all for it.
All figures can be found for free on Trading Economics which lists the sources. Generally they are ONS or foreign equivalent.
Re: Brexit, we have had the highest GDP growth in the G7 since we left the transition period on Dec 31st 2020. Personally I think it is too early to look for the economic effects of Brexit (aside from the obvious repudiation of the claims of an economic hit if we left the EU).
It seems to me self-evident that having secured a full FTA with the EU we now have the best of both worlds: we can trade pretty much as we have since we joined the Common Market with our European neighbours whilst also setting our own immigration, trade, agriculture, environmental, regulatory and tax policies. We are free to sign trade deals with other countries and to select the type and number of people we welcome to live in the UK as our needs dictate.
How wisely we use these freedoms is up to the people of this country and the representatives we elect. So far, the distractions of Covid and war and inflation have meant that we haven’t really started to have those conversations. But I’m sure we will in time.
As to regional investment. I’m sure things could be done better but i don’t really think that government schemes are the way to grow the northern economy – beyond obvious things like roads and rail building and energy and mining permits. But if a party comes up with a good proposal, i’m all for it.
You’ve not referenced any source for your data, but regardless alot of the years you quote are pre-Brexit, which I would advise you don’t use to support your positions.
You don’t mention the poor comparison in investment which is what is going to make the difference going forward. Why might this have happened to the UK? You make no suggestions on levelling up other than some vague hope southerners will move north for cheaper housing. Not quite what Northerners will have assumed was meant by levelling up I would contend. And then a hope fracking comes as a saviour to some parts of the North. It’s hardly a rebalanced industrial policy is it? No wonder they are flipping away from the lies they were told.
As to your advice on different media sources, noted, though I find life is too short for reading and watching things that annoy me. But good luck to you if you and your neuronal muscle fibre if you think otherwise.
In terms of levelling up, I think the natural movement of people from the South East to the rest of the country driven by house prices differentials and the move to remote working is going to do this without some grand government scheme.
Though if they got on with fracking, we could see a nice boom in Lancashire as well.
Spurious?
The Full year GDP growth figures for 2022 the G7 countries are available anywhere. The UK was the fastest growing economy over 2022. As it was in 2021.
The breakdown for the years between the GFC and Covid: 2013-2019 are as follows
UK, 2013: 1.9%, 2014: 3%, 2015: 2.6%, 2016: 2.3%, 2017: 2.1%, 2018: 1.7%, 2019: 1.7%
France (same years) 0.6%, 1%, 1.1%, 1.1%, 2.3%, 1.9%, 1.8%
Germany (same years) 0.4%, 2.2%, 1.5%, 2.3%, 2.7%, 1%, 1.1%
The jobless rate in France is 7.3%, in UK is 3.7%.
Comparative wage growth figure are harder to come by – at least for me – as different governments report them differently.
Last report from UK was 6.4% wage growth in November (to £629 per week) which adjusted for inflation was -2.7% decrease.
Germany last reported figures in Sept 22 and they report as Real Wage Growth (which I take to be the same thing as “inflation adjusted”) of -5.7%.
France reported the quarter to Sept 22 as 0.9% growth but I don’t think this was inflation adjusted “real” wage growth. In fact this doesn’t seem to be a stat that the French publish that often and they have gaps in their historical reporting.
And right on queue, Germany’s economy goes into recession. Big news in Europe but barely a peep here about it. The whole article is about cherrypicking data in the most inappropriate way. It is like writing an article about the German economy saying that the West of Germany is not in recession (in spite of the country-wide figure). I don’t know the regional figures btw, just an example.
Your figures seem spurious MM (can’t find anything anywhere close to those you’ve quoted after a decent search), but others already covered that.
I suspect though you do yourself a disservice limiting your exposure to publications that resonate with your own biases. I enjoy Spectator too (esp Podcast), even though often not representative of my views and values. It’s a test of neuronal muscle fibre to expose oneself to other views and rarely does it leave one entirely unchanged. Recommended.
As regards the article – there is some evidence that North of England receives one of the lowest regional levels of investment in the whole of Europe. The UK is pretty poor overall more recently too and slid right down the investment table, but the North is especially deprived on this score. ‘Levelling up’? Hmm a bit of a sick joke isn’t it.
And right on queue, Germany’s economy goes into recession. Big news in Europe but barely a peep here about it. The whole article is about cherrypicking data in the most inappropriate way. It is like writing an article about the German economy saying that the West of Germany is not in recession (in spite of the country-wide figure). I don’t know the regional figures btw, just an example.
Exactly right.
I must say you do better than me with the BBC Peter.
I haven’t watched, listened to or read any of its output for the last couple of years. Same for Sky and ITV and, what we used to call, the serious newspapers.
I find that a few selected news outlets – UnHerd and The Spectator essentially – keep me well enough informed.
I like to look at the actual numbers on economics rather than their presentation by journalists pushing an (anti-British) angle. I recommend Trading Economics if you don’t use it already.
As for entertainment, mainstream TV seems to be little more than an excuse for woke lectures and token casting. Best avoided at all costs.
The stats I see don’t in fact confirm any of that. Unless you are taking a very small few months last year (and I’m not even sure about that) France and Germany are recorded as having significant wage growth since 2005 compared to low growth in Britain. The previous decade was good for the U.K. comparatively
Cost of living isn’t the same as wages. Britain has expensive transport, Germany has expensive health.
I’m talking about YoY average weekly earning growth adjusted for inflation during this period of post-COVID inflation in 2022.
(Admittedly these figures are hard to compare on the source I have – Trading Economics. Maybe if you are a foreign speaker, you have better wage growth figs for France and Germany than those on the site).
I’m talking about YoY average weekly earning growth adjusted for inflation during this period of post-COVID inflation in 2022.
(Admittedly these figures are hard to compare on the source I have – Trading Economics. Maybe if you are a foreign speaker, you have better wage growth figs for France and Germany than those on the site).
I think your figures are dubious.. selective at best. Any figures I’ve seen show a very different picture.
I have long since come to terms with the fact that you and I going to disagree on everything, Liam.
I have long since come to terms with the fact that you and I going to disagree on everything, Liam.
Quite. A lot of reporting here simply lacks any context and seems to be driven by an agenda of trying to “prove” that the UK is worse than anywhere else. Though curiously migrants seem to reject the greener grass countries they pass through on the way here. But a lot of people seem to believe that the UK is both the worst country in Europe and that we are “a wealthy country that should do more for ‘migrants'”. Without being aware of any contradiction.
I barely listen to the BBC any more. Last night a supposedly neutral reporter – Carolyn Quinn – on Radio 4 sarcastically described Rishi Sunak’s goal to improve the UK economy in a particularly sneering tone as though it were an impossible task for him. Though doubtless not for other parties that she would prefer to be in power.
The stats I see don’t in fact confirm any of that. Unless you are taking a very small few months last year (and I’m not even sure about that) France and Germany are recorded as having significant wage growth since 2005 compared to low growth in Britain. The previous decade was good for the U.K. comparatively
Cost of living isn’t the same as wages. Britain has expensive transport, Germany has expensive health.
I think your figures are dubious.. selective at best. Any figures I’ve seen show a very different picture.
Britain outperformed France and Germany from 2013- 2019
UK – 2.1% annual growth
France – 1.4% annual growth
Germany 1.5% annual growth
For the second year in a row we have had the highest annual growth in the G7.
2022:
UK 4.0%
Italy 3.9%
Canada 3.8%
France 2.6%
USA 2.1%
Germany 1.8%
Japan 1.7%
There are major public sector strikes going on in France and Germany.
The unemployment rate in the UK is half that of France and the participation rate much higher.
Wage growth in the UK has far outstripped France and Germany which means the cost-of-living in those countries has become more expensive faster than in ours.
In the USA they changed the definition of recession so as not to make the current administration look bad. Now in this article the definition of recession is being manipulated again but in the other direction. Funny how the maleability of words everyone used to understand always seems to work one way.
In the USA they changed the definition of recession so as not to make the current administration look bad. Now in this article the definition of recession is being manipulated again but in the other direction. Funny how the maleability of words everyone used to understand always seems to work one way.
With so much of our economy and politics tied up in London and the South East of England, is it any wonder? I appreciate that the government has been trying to address this balance through levelling up (although would this have happened without Brexit one wonders), but Westminster cannot hope to balance the needs of most of the UK for which it neither knows nor cares about. I’ve touched on this elsewhere on here, but I think some form of federalism in the UK (especially England) is needed.
Federalism meaning more politicians? What i don’t get is that the huge majority of MPs are from outside the south east. Can’t they make decisions as part of the government that benefit their constituents? The trouble I giess is that they are all squabbling amondst themseves (North East/West, South West/Midlands, Wales, Scotland) so they can’t actually agree on a positive platform.
Ideally this should be introduced alongside some form of proportional representation and with a cut in the number of MP’s who get sent to Westminster. Considering Westminster’s responsibilities would be fewer in this scenario, it won’t need that many MP’s. On balance, there would be more politicians overall, but also more accountable to people and the areas they live in.
Ideally this should be introduced alongside some form of proportional representation and with a cut in the number of MP’s who get sent to Westminster. Considering Westminster’s responsibilities would be fewer in this scenario, it won’t need that many MP’s. On balance, there would be more politicians overall, but also more accountable to people and the areas they live in.
Yes, perhaps, divide England into say 5 regions so the population of each is comparable to some extent with the other 3 nations sounds a good idea. Then the London/SE near monopoly on power / money could perhaps be curtailed, with devolved powers to those 5 regions.
It would need nearer to 10 regions just for each to be close to Scotland’s population (the largest nation outside England). More and more politicians. The mayors haven’t exactly been a roaring success have they (apart from inflating some of their egos). Now imagine even more of them.
It would need nearer to 10 regions just for each to be close to Scotland’s population (the largest nation outside England). More and more politicians. The mayors haven’t exactly been a roaring success have they (apart from inflating some of their egos). Now imagine even more of them.
Federalism meaning more politicians? What i don’t get is that the huge majority of MPs are from outside the south east. Can’t they make decisions as part of the government that benefit their constituents? The trouble I giess is that they are all squabbling amondst themseves (North East/West, South West/Midlands, Wales, Scotland) so they can’t actually agree on a positive platform.
Yes, perhaps, divide England into say 5 regions so the population of each is comparable to some extent with the other 3 nations sounds a good idea. Then the London/SE near monopoly on power / money could perhaps be curtailed, with devolved powers to those 5 regions.
With so much of our economy and politics tied up in London and the South East of England, is it any wonder? I appreciate that the government has been trying to address this balance through levelling up (although would this have happened without Brexit one wonders), but Westminster cannot hope to balance the needs of most of the UK for which it neither knows nor cares about. I’ve touched on this elsewhere on here, but I think some form of federalism in the UK (especially England) is needed.