Wednesday, 27 April 2011
UK GDP not shock - 0.5% growth
The 'growth' spurt given by the pumping in of QE money and exorbitant Government spending is over and now we are left with the underlying private sector growth trying to outdo the very modest public sector contraction.
In real terms its rubbish because inflation is at 4% (UPDATE re comments, constant prices are compared to CPI not RPI, so the disparity is messing with the figures) so any growth this year under that is a decline in real terms on an RPI basis, on the plus side a low pound could re-value and alter the equation but ultra-low interest rates are not going to encourage that.
In the long-term, all is not so bad for macro-economic Britain, the deficit is being eaten into and the tax base will start to grow substantially and close the structural deficit as the Public Sector is shrunk over time.
Politically who would have thought that the Lib Dems hold the keys to the future of the UK a couple of years ago, if they fall apart and the Coalition fails then Labour will be back in and mess everything up again!