ANY discussion of the latest economic growth statistics must always be prefaced by a health warning. These are early estimates which are often revised, sometimes drastically. Citigroup calculates that between1999 and 2010, the year on year growth in British GDP was revised up by 0.5 per cent on average, more than in any other G7 countries. In any case, all of the UK’s economic statistics are about to be torn up, going back a number of years, as the Office for National Statistics embraces new accounting standards.
So much for the caveats. The UK’s first quarter growth numbers were remarkably positive: the economy grew by 0.8 per cent quarter on quarter and by 3.1 per cent year on year.
One couldn’t really have hoped for much more, and the early breakdown suggests a broadly balanced recovery, with industrial production up 0.8 per cent, services by 0.9 per cent and construction by 0.3 per cent, still the only real area of weakness.
The officially reported level of UK GDP is now only 0.6 per cent lower than it was at the peak of the bubble, which means that the economy is on course to finally set a new record in the second quarter. It took far too long, but at least we are finally getting there. The non-oil and gas economic output is already larger than the pre-recession peak. Even better, productivity is growing again, with the total number of hours worked rising at a slower rate than output. Real-term pay rises are therefore likely to accelerate over the coming months, assuming that inflation remains contained for now.
The overall picture is far from perfect. Huge imbalances remain, including rocketing house prices and the distortions created by loose monetary policy. But yesterday’s figures were a good step in the right direction.
GDP HIDES MEDICAL PROGRESS
THERE is more to well-being than GDP figures, of course, though not necessarily in the way that the critics believe. Many of the improvements in living standards generated by long-term economic growth and the technological progress associated with it never make their way into GDP statistics. Number-crunchers attempt to adjust for improvements in the quality of goods and services to reflect some of this, but the process isn’t perfect.
Here are two very serious ways in which our lives are getting better, thanks to technological progress. In 1971-72, just 24 per cent of those diagnosed with cancer survived for 10 years; today, it is 50 per cent. The decline in infant mortality since 1983 has been almost 60 per cent. This, and many other less serious improvements show that it must be nonsense to claim, as many now do, that today’s generation won’t be as well off as previous ones. Yes, house prices are far too high, a phenomenon caused by a politically-created scarcity of supply, and that is damaging many young people. But the present generation will lead longer, healthier and better lives thanks to the wonders of medical breakthroughs and new technologies.
STOP THE STRIKES
HOW much longer are these nonsensical strikes going to keep on going for? Nobody can possibly believe that Transport for London will U-turn on closing its ticket offices, which are no longer needed, and yet that is the principal reason for this dispute. There will be redundancies, but they will not be compulsory, and many staff will be moved out into stations. Technology has changed the way consumers purchase their tickets and passes, thanks to the Oyster card and the internet, and old structures are no longer needed.
This is no different to the changes that every other kind of business has seen as a result of the digital revolution. So what’s the point of the industrial action, and of all the disruption to millions of commuters’ lives and to economic activity? The sooner this daft, pointless strike ends the better.