The phrase “round up the normal suspects” seems appropriate when assessing the GDP figures for the third quarter of 2015. Blue-eyed boy “services” still fighting the good fight, manufacturing lurching from the lacklustre to actual small decline, and the reliably wayward construction sector having one of its bleaker periods. Yes, the economy’s growth slowed to 0.5 per cent compared with 0.7 per cent in the second quarter, but this was largely due to the volatility inherent in the construction industry.
Stripping that out, overall the recovery remains on track. Britain’s GDP is now 6.4 per cent higher than its pre-recession peak in early 2008. A general cause to feel quite cheerful, even if this year’s buoyancy is somewhat less than 2014.
There is an underlying sense of deja‑vu: the economy remains unbalanced. The fabled march of the makers has not come to a halt because for that it would have needed to have got going in the first place.
Sterling‑straitened exports remain lacklustre, and businesses are cautious about investment given the macro-economic headwinds, most particularly in emerging markets. And, at bottom, the UK economy is still far too reliant on consumer spending, fuelled by six years of virtually rock‑bottom interest rates and a rise in real wages from late last year.
It is exactly this good, but could do better, GDP report card that is likely to have business organisations reiterating their calls for more spending on rails, roads, aviation and the internet to build further power and longevity into the recovery.
BP nearly there post-Gulf disaster
It has been a long haul for BP in its bid to draw a line under the Gulf of Mexico disaster in 2010. It is even now not certain it is totally there, but it is so far down the line with its $55 billion in fines, compensation and clean-up costs that chief executive Bob Dudley has grounds for saying BP could be on the verge of a new era, uncluttered by the past.
If so, it is a new era that the oil giant will enter as much streamlined, less strategically expansive, and quite frank about buying time with investors through a robust dividend policy. In the short-term, of course, BP is suffering from the low oil price that is impacting the energy sector. But the savage axe taken to both capex, and a continuing asset divestment strategy to make the group more manageable in these challenging times will stand BP in good stead for better prospects.