The rebalancing of the economy is still a long way off with export growth feeble despite a much-depreciated sterling. UK export growth remains feeble, given the value of sterling.
The release of the growth figures by the Official for National
Statistics is a bit like peeling an onion. UK number crunchers have
three goes at estimating the quarterly performance of the economy and a
little more is revealed each time.
In October, the ONS released its flash estimate of GDP for the third
quarter based on the output of sectors such as manufacturing,
construction and services. This showed the economy had expanded by 0.7%
between the second and third quarters.
More data has rolled in over the past month. The ONS still believes
the economy grew by 0.7% in the third quarter – slightly down on the
second quarter but still robust – and can now provide more detail about
the balance of growth.
That’s because the second estimate of GDP supplements the output
measure of growth with an expenditure measure of growth. So we find out
how much of the growth was due to consumer spending, how much was due to
government spending, the contribution of investment, whether firms are
building up or running down their stocks, and what is happening to
trade.
The message from the expenditure components of growth is that the
rebalancing of the economy is still some way off. The domestic economy
expanded by 0.9%, with trade knocking 0.2 points off the quarterly
growth rate. Consumer spending rose by 0.8% in the third quarter, while
government expenditure was up by 1.1%. Business investment fell by 0.7%.
Ministers can point to the weakness of the eurozone to explain away
the poor export performance. This, though, is a feeble excuse given the
weakness of exports – despite the boost from a substantial depreciation
of sterling – throughout this parliament.
So, yes, the economy is growing. And, yes, it is growing faster than
that of Germany or France. But it is the same old economy, with the same
old weaknesses.
