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.
SubscribeAh yes, Xenophobic accusations against Liverpool fans OK. “Racism” against local youth not OK so a blind eye employed by politicians.
Though funny how Liverpool fans are always blameless – even for the deaths of the Italian fans. Always the fault of others.
Ian – NO ONE ever said Liverpool were blameless re the tragedy at Heysel. In fact quite a few “fans” went to prison and English clubs were banned from competing in Europe in the aftermath.
It would have been more intelligent to build the Stade de France in France rather than the lost territory of Saint-Denis.
Sadly Saint-Denis also contains the great Benedictine Abbey/Basilica, perhaps the most important church in France if not the world. Not only the necropolis of the Capetian, Valois and Bourbon Kings and Queens, but also where the revolutionary idea of ‘Gothic’ architecture first took root under the brilliant Abbot Suger.*
In fact it is a real case of “look on my works ye mighty and despair “!
Yet know as you so rightly lament it has degenerated into a ghetto.
(* mid twelfth century.)
More than sad; it is a crime against our heritage.
It’s sad what’s happened to St Denis, it’s cathedral built by Abbot Suger the birthplace of Gothic architecture
Sorry, I’ve just duplicated that because I failed to see your apposite remark! However it was not a Cathedral but a Benedictine Abbey, now often referred to as a Basilica.
Well, we’re both right. It was built as a Benedictine abbey, but is now a cathedral
Never St Denis, but always Saint-Denis. Otherwise it recalls ‘The Beano’ or perhaps the splendid Denis Thatcher does it not?
Well it is not Hagia Denis – the main mosque of North Paris yet.
Matter of time.
The people storming the gates are not wearing red for Liverpool. Nor are they really wearing white for Real Madrid. They must be locals who are in the business of not missing out on great sporting occasions. Lookdown in concrete jungles probably meant some of them wanted the “correction” of attending the stadium atmosphere of a grand football final. They clamour to be mollycoddled, the seemingly well-dressed souls that they are. By that I mean all they have recreationally is football. Nothing else would delight them. (That may be down to inverse snobbery on their part). They’d probably invent football, at least, if football did not exist.
I find within football’s inane tribalism and obscene greed metaphors for a plethora of today’s cultural milieu – on the surface, a pleasant sporting day out but scratch the surface..
Why as the censor struck out the words Capetian, Valois and Bourbon?
Is this what is called ‘dumbing down’?
They haven’t.
What Liverpool sowed at Heysel they reaped at Saint-Denis.