The initial estimate for UK Q2 GDP that was released by the ONS this morning makes gruesome reading. (BBC story here). GDP fell by 0.7% in the quarter, much worse than expected, to stand 0.8% below its year-ago level. Construction, production industries (including manufacturing) and even services all posted lower output for the quarter.
And yet....the ONS has been forced to admit that its figures are even more unreliable than usual. It is unable to quantify the impact of either the extra holiday for the Queen's Jubilee, or the abysmal weather throughout the quarter, on the recorded figures. It seems very likely that the underlying growth trend in the economy, though very far from strong, is nowhere near as weak as these numbers suggest. That's certainly what the steady growth in employment seems to indicate. It's increasingly hard to fathom quite why the ONS feels compelled to offer these early and fundamentally unreliable estimates of GDP, rather than adopting a reporting schedule that affords it (and investors and the public) a greater degree of accuracy and certainty.
Unfortunately there is one important data series that does seem to be consistent with the weak GDP data. So far this fiscal year, UK public sector borrowing is running above last year's levels, and the data would be even worse but for a bit of fancy accounting relating to the Post Office pension fund. George Osborne's austerity approach is stifling confidence and growth while failing even to make a dent in the fiscal situation -- it's the very definition of a failed policy.
#osborneexcuses has been trending on Twitter ever since the data were released. Makes a change from Justin Bieber, I suppose, but not one that the Government can take any pleasure from.
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