THERE’s something for everyone in most economic figures, certainly UK ones. Chancellor George Osborne was almost OMG! cockahoop on Twitter (it passes for political rhetoric now) as yesterday’s official data showed the economy grew at its fastest pace since 2006 last year.
Revised data from the Office for National Statistics (ONS) showed GDP rose 2.8 per cent in 2014, up from a previous estimate of 2.6 per cent, confirming the UK as the fastest growing of the G7 major advanced economies.
The ONS data also showed household spending grew 0.6 per cent, or £1.6 billion, in the final quarter of last year. Coming a little more than a month before the general election, you can understand the Chancellor’s fervour as a stronger economy and a consumer feel-good factor apparently march in tandem.
Happy days are here again, and in the nick of time will do quite nicely. But, as has quite frequently happened in this curious economic recovery, the spring sunshine came with clouds. The ONS also revealed the annual current account deficit ballooned to £97.9bn in 2014, up from £76.7bn in 2013. It is now a worrying 5.5 per cent of GDP, the highest percentage level since the late 1940s.
In addition, there was a slump in business investment in the last three months of last year, which gave ammunition to critics that this recovery is built on the sands of consumer spending rather than the more solid gravel of corporate spending and exports.
Both the coalition government’s glee and its opponents’ criticisms are legitimate, even if self-serving in electoral terms.
There are genuine grounds for both optimisim and concern. On balance, I would say the government will probably be the happier.
Financial experts of various hues can talk about the need for broader-based economic recoveries than those just based on consumer credit and optimism. It is statistically correct.
But “business investment” and the need for “exports” can sometimes appear a bit esoteric to the average voter when what really matters to them is the money in their pocket.
Just look at the relative success of Labour’s campaign – until some months back, at any rate – of saying the economic recovery had not translated into “rising living standards” for the average bod.
In that sense, the latest data suggesting everything is tickety-boo in user-friendly terms even if we have a towering current account deficit plays into people wanting more than anything a tangible feeling of things being better.
How the Mitie are fallen amid austerity
BLESSED are the outsourcers, because they will cut our costs. Such has often been the maxim of financially strapped local councils.
But austerity has even caught up with the sector itself, witness the profits warning from FTSE 250-listed Mitie. The company put the blame squarely on the impact of local authority spending cuts on its homecare and social housing businesses.
Shares in Mitie slumped yesterday. It is just as well the group has another strongly performing string to its bow in its facilities management business, which includes venues such as football stadiums and the Chelsea Flower Show.