‘Absurd’ to read significance into today’s GDP revision, says ONS

The UK economy did not enter a double dip recession at the beginning of 2012, according to new figures from the Office for National Statistics (ONS).

The UK economy did not enter a double dip recession at the beginning of 2012, according to new figures from the Office for National Statistics (ONS).

In a revision of its historical data, the ONS said growth was flat in the first quarter of 2012, revised from an earlier estimate of a 0.1 per cent contraction.

This has been jumped on by many Tories as evidence that under George Osborne’s economic stewardship things aren’t nearly as bad as Labour has made out.

Politically the fact that there was no double dip is indeed likely to have an impact. The double dip, along with the Moody’s downgrade, was a pretty symbolic indictment of George Osborne, after all.

However, that the fact we avoided a double dip recession is seen as cause for celebration at all is testament to just how low expectations have become. We are essentially celebrating the fact that the economy has stagnated for three years.

Expectations were not always so low, either. As I wrote yesterday, the June 2010 Budget OBR forecast was that the UK economy would by this point be growing at a rate of 2.9 per cent. The latest OBR forecast for 2013 is 0.6 per cent – hardly a ringing endorsement of the policies of the last three years.

As to the significance of the ONS revision itself, the ONS themselves say it would be “absurd” to read too much into it:

Spending review

In other words, look at the bigger picture. While Q2 2012 is now believed to be slightly worse and Q1 2012 slightly better than previously thought, since 2010 the economy has still been flat and most people  have seen their living standards falling.

2 Responses to “‘Absurd’ to read significance into today’s GDP revision, says ONS”

  1. tangentreality

    So if it’s not significant, why did Labour try to make so much political capital out of a 0.1% contraction?

    A technical recession is either significant or it isn’t. But you can’t argue that’s it’s significant when it’s in your favour, and dismiss it when it isn’t.

  2. DJT1million

    The symbolism is significant however the reality of 0% growth or -0.1% growth is not significant in real terms.

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