Q2 GDP figures revised

Yesterday saw the publication of the second estimate of UK GDP for the second quarter of this year.  The fall of 0.7% in the first estimate was revised up to a fall of 0.5%; still grim.  Upward revisions of construction and industrial production output were the main contributors to the revised figure.

Perhaps the most startling news was the fall of over 3% in real fixed investment.  This is the steepest decline since the same quarter in 2009.  The figures will need greater scrutiny but it could well be that businesses were worried about the Eurozone crisis and reined in investment plans until the outlook improved.  If so, this highlights the main growth problem we have, which is one of confidence.  Without sufficient confidence even ultra low interest rates and Quantitative Easing will not be sufficient.  That is why a government whose main philosophy is to sit back and let the private sector pull itself up by its bootstraps will ultimately have few answers to the lack of growth we are facing - at best.

Stephen Beer, 25/08/2012

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