IF WE weren’t in trouble then, we are now. It is now clear that economic conditions in the United Kingdom economy did worsen during early summer. This neither makes nor breaks my theory that the winter months were not as bad as the official numbers looked, but it probably renders it irrelevant.
A downturn in construction was the key swing factor in the rotten second quarter gross domestic product (GDP) numbers.
I am often rude about early GDP estimates, but this downturn was probably real enough. After all, in case anyone has forgotten, it rained forever and the wet trades struggle (ahem!) when it’s wet. Construction, though, does usually bounce back; jobs get delayed but not cancelled.
The tragi-comedy of the Eurozone rumbles on, as if to prove the maxim that “it has to get worse before it gets better”.
It is high time Greece did the decent thing and floated off into the Aegean, while Spain might as well admit the game is up and hold out a (large) hat for charitable offerings.
The notion that Britain would suddenly transform itself into a powerhouse of manufactured exports remains a triumph of hope over rationality.
And yet – such manufacturing as remains in the UK is not only really rather good, it is growing and it is indeed gaining world market share. It’s a good story, but not a lot of immediate help in the grand scheme of things.
Forecasts for 2012 now signal an overall contraction and expectations for 2013 sidle south with each revision.
In short, you could argue, we’re doomed. But who cares? Down in London, exciting things are happening; even this tired old cynic was pretty impressed by that gloriously eccentric opening ceremony and Team GB is hoovering up gold medals with an alacrity that is refreshing and startling in equal measure.
True, the Games have scared off many tourists and so will dent GDP as a significant slice of the workforce bunks off work – oops, sorry, “works from home” – but for a change we really do seem to have got something right.
That should, will, does make us all feel better; and once the games are over there will be a lot of deferred shopping to be done – or so I’m told.
Next month I set off for the Highlands for a week’s R&R and the weather will be good; I know past performance is not meant to be a guide to the future, but we’re talking weather forecasts here, not picking unit trusts.
Predicting good weather may seem a contrarian bet after the year we’ve had to date, but we contrarians usually know a thing or two.
And what’s good for me should be good for construction too; lots of busy builders catching up once the footings have drained.
And amidst all the gloom some of those inconvenient truths remain.
The employment data are still not consistent with recession and the anecdotal evidence from industry is that things may not be good but they aren’t a disaster either.
Whether government is right to be so focused on deficit reduction is a moot point.
The strategy looked right when it was set out two years ago and the UK’s continued “safe haven” status is about as good as accolades get.
But we have been unlucky; meltdown next door and all those uncertainties I wrote about last time have created headwinds that have made the whole process tougher. .
But that might be precisely the wrong thing to do. Amidst all the racket about “cuts”, we tend to get things out of proportion; there is nothing unprecedented about current budget cuts – it’s been done before and we survived.
And our public finances are in a terrible state; a whiff of backsliding and the markets would be quick to react, painfully. Better, then, to grit it out; to keep calm, as they say, and carry on – which for the majority of us frankly isn’t that hard.
• Peter Bickley is a consultant economist
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Weather for Edinburgh
Friday 24 May 2013
Temperature: 3 C to 12 C
Wind Speed: 18 mph
Wind direction: North east
Temperature: 7 C to 17 C
Wind Speed: 13 mph
Wind direction: West