Welcome to the growthless recovery
‘We
are beginning to turn the corner…the deficit is falling. Our economy is
growing….British business….you invested before you knew for certain
that things were getting better…(people said) You’ll never cut the (EU)
Budget….I cut that budget. It makes no difference whether you live in
the North or in the South…what matters is the effort you put in. A land
of opportunity starts in our economy….and at the end of it all – more
money in your pocket….I want people to keep more of their money. I want
to raise living standards in the long term.’
The Slog: Every last assertion above (lifted word for word from David Cameron’s
keynote speech yesterday) is a lie. But while this and other
hullabollocks about Britain’s bright future and economic healing were
being spewed out at the Conservative Conference, The Office of National
Statistics (ONS) quietly published its economic review.
In the cold light of Thursday’s dawn, it might make sobering reading
for those Tories who have not, as yet, succumbed to the invasion of the
sanity snatchers.
In its section on the shape of the economy, the ONS writes (my emphasis):
‘….while the growth over the most recent few quarters has been spread across the main sectors of the economy, both the Manufacturing and Production sectors remain well below their pre-2008 levels of output. Much of the recent strength in Manufacturing, in particular, has also been concentrated in relatively few sectors.’
Homing in on that manufacturing growth, the ONS observes:
‘…output growth in the Transport Equipment sector accounts for almost all of this increase…only three of the thirteen manufacturing sub-sectors have re-attained their 2008 peak level of output….’
So the Sun headline is this: manufacturing and production are worse
than they were before the 2008 collapse, and only about 25% of the
sector is actually growing. Of that 25%, almost all of it pertains to
motor vehicle equipment, an industry we fell out of decades ago: it may
pay UK tax, but the income goes to Indians and Germans, not us.
Finally, Osborne’s Help to Buy vote-bribe that has allegedly been
such a success (and is now being trumpeted by the Government as a sure
sign of economic recovery) is doing almost nothing outside London and
the South East – in which regions, of course, it is creating an unwanted
price bubble that must burst. Actual volume of mortages and value of
monies being lent is well down. As the ONS puts it:
‘….prices in the North East and North West remain 11.7% and 9.6%
below their respective peak levels. In Northern Ireland, average house
prices in July were more than 40% below their level at the beginning of
2008. However, while average UK house prices have been rising strongly,
data from the Bank of England suggest that there has been little feed-through into net lending for loans secured on dwellings.
Figure 10 shows the change in net lending to households secured on
dwellings. It suggests that from a peak of around £9bn per month prior
to the economic downturn, net mortgage lending fell sharply during the
first half of 2008, and has remained subdued over the following five
years. Even in the most recent data there is little evidence of a
sustained increase in net lending.’
There is no housing boom, any more than there is an economic
recovery. Despite interest rates described by the ONS as ‘amongst the
lowest on record’, neither business nor individuals are expressing any
confidence in investment, and the banks still aren’t lending. The simple
truth is that Draper Osborne’s HTB is another weapon of distraction to
hide the fact that the recovery is bollocks, the banks are broke, and
the People lack both confidence and money. (While growth over the year
has been 1.5%, employee income growth fell back again, by 0.7%). It’s
that old drag effect again. Or maybe we should call it the Draghi
Effect: it is, after all, at the core of his economic strategy.
The latest polls show that, were there to be a general election
tomorrow, Labour would have a comfortable overall majority of around 80
seats. And things are only going to get worse: Camerlot has started its
electioneering too early, and it is going to pay a fully-deserved
penalty for so doing.
Meanwhile, Cameron just handed Miliband and Balls a suet pudding of
mendacity on a plate. Do they have the wit to use it against him? I
doubt it.
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