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GDP is up 1% – give or take 0.7%

25 October 2012

So it’s official: the UK economy grew by 1 per cent in the third quarter of 2012, according to the ONS’s preliminary estimate. That’s significantly better than the consensus forecasts. As all the politicking and pontificating begins, there are a few caveats worth keeping in mind:-

1. It’s just an estimate. As I showed yesterday, the margin of error in the ONS’s preliminary estimates is +/– 0.7 percentage points. That means Q3 growth could really turn out to have been anything from 0.3 per cent to 1.7 per cent. Still, we can be confident that the economy did return to growth in the quarter, ending the double-dip recession — though this may have been thanks to some one-off factors, which brings us to…

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2. The Diamond Jubilee. The extra bank holiday in June was estimated to depress Q2 growth by around 0.5 points, and so artificially inflates this quarter’s figure by 0.5 points, since we were starting from a lower base.

3. The Olympics. The ONS estimates that ticket sales for the Olympic Games boosted Q3 growth by about 0.2 percentage points. That’s consistent with a previous estimate by the Bank of England. Without the Olympics and the Jubilee, then, it’s likely that today’s figure would be more like 0.3 per cent.

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Show comments
  • mick fleming

    They can massage the figures all they want but to the man in the street trying to stretch his wages out it mean nothing.Now all energy suppliers have increased charges,ford shuting down food prices on the increase due to poor crops no wonder ostrich osbourne has put back his speech on how well we are not doing

  • B Dodkin

    If the economy inherited by the Tories was “The mess Labour left us” (erroneous but quoted as the perfect sound bite and too complex ever to allow time for adequate discussion in most interviews), I cannot wait for another mess

  • Mdina Dungeons

    Does a triple dip recession exist?

  • les

    johnathan jones is all over the place with his comments using his analysis the chances are we were never in a double dip recession after all after all the gloom and doom from the labour party and people like him

  • Ben G

    Why does it take two consecutive quarters to declare a recession has begun, but only one to say it is over?

  • anyfool

    Is there nothing this government can do without you downplaying it with your dubious statistics based on other dubious statistics.

  • AdemAljo

    “The extra bank holiday in June was estimated to depress Q2 growth by around 0.5 points, and so artificially inflates this quarter’s figure by 0.5 points, since we were starting from a lower base.”

    This is just ridiculous.

  • HooksLaw

    Without the Olympics people would have spent on something other than ticket sales – this is a fallacious argument.
    Ticket sales were paid for many months before the actual event and depressed spending figures then. We are coming back into balance.
    There may be a point about people buying overpriced tat, such as tee shirts and mascots but that cannot have a great effect.

    When the ONS gave a figure of -0.7% a while back I did not notice too many people bringing forth caveats. These figures have been shown to be overstated on reassessment. The Q’s growth may well turn out to be even greater.

    • DavidDP

      More to the point, the figure for the Olympics needs to be netted of the drop in visitor figures that occured.

  • TomTom

    It must be a lovely world inside the ONS. Now they just have to make the facts on the ground fit their Gosplan nostrums. Rising economic activity should be reflected in increased Corporation Tax receipts and NIC revenues and rising Interest Rates.

    • Dimoto

      It may be rising, but from a very low base, and in a business environment of cut-throat competition – there is also the small matter of a steadily reducing Corporate Income Tax rate, and new concessions for certain investments.
      Not to mention a booming black economy.
      And a government flooding the banks with free money and driving down interest rates – as any pensioner could tell you.

    • HooksLaw

      Aren’t people able to offset previous losses against corporation tax?

      • TomTom

        Since most of these corporates didn’t pay any Corporation Tax the impact of carryforwards should be minimal outside the banks

  • Archimedes

    That’s a-may-zin! I bet George Osborne is dancing around the Treasury singing Grease Lighting right now.

  • IanH

    I’ve not read the report yet, but has the ONS offset the ticket sales against the loss in productivity during the Olympics, I somehow doubt it if the claim is 0.2 i.e. about £35m which sounds like just the ticket sales themselves

    • Dimoto

      What a total idiot is our Mr Jones.
      Yes, it’s a first estimate and the ONS is decidedly unreliable, but ….
      Where were all these warnings for the past two years you chump !?
      Where were the blog-posts explaining the background to the ridiculous Q2 -0.7% ?
      Jones and the Labour trolls will apparently say anything to turn any good news into bad news and further damage public confidence.

      • Dimoto

        BTW, the last line of the ONS bulletin makes the bold statement (given all the inaccuracies and caveats), that GDP by volume in Q3 2012 is back to where it was in Q3 2011, i.e. before the “three quarters of negative growth” .
        At least it might shut up Lagarde & co.

      • dalai guevara

        Yes, calling people Labour trolls for pointing out that a 1% growth amounts to a mere £15bn rise is laughable, when OTOH we have printed ten times that in the same period. Where did the other £160,000,000,000 go?

        Please bear in mind that Balls would have printed even more? He is considered by ‘labour trolls’ to be the worst of two evils.

    • Matthew

      0.2 is about 700m.

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