U.K. Economy Shrunk More Than Previously Thought in First Quarter Thanks to Third Lockdown
The Office for National Statistics (ONS) has revised its GDP figures for the first quarter to show that the economy shrunk more than was previously believed as the third lockdown hit hard. The MailOnline has the story.
Data published by the ONS showed that U.K. gross domestic product (GDP) is estimated to have decreased by 1.6% in the period between January and March.
That is up slightly on the original estimate of a 1.5% reduction.
It means that the level of GDP now stands at 8.8% below where it was in the fourth quarter of 2019 before the coronavirus pandemic hit, revised from an initial estimate of 8.7%.
Despite the economic dip in the first three months of 2021, household saving levels again returned to record highs.
The household saving ratio – the estimate of the amount of money that households can put away – increased to 19.9% in the first quarter.
That is the second highest ratio ever recorded and compares with 16.1% in the final three months of 2020…
The ONS said that household spending fell in the first quarter of this year as lockdown prevented families from spending money in restaurants and non-essential shops.
Spending in restaurants and hotels dipped by 37.2% on the previous quarter.
The ONS said that the dip in GDP was largely driven by contractions in the education, wholesale and retail sectors caused by the tightening of coronavirus curbs.
The closure of schools and the return of pupils learning at home hit the economy particularly hard.
Education output shrank by 14.7% in the first quarter of 2021 which “reflects the relatively low level of school attendance in January and February because of the closure of schools as part of the Government response to the coronavirus pandemic”.
Worth reading in full.
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Can you please stop publishing your fake news
Sonny said the economy would grow by 7.9% this year, our progress to sunlight uplands is predicated on it
The true damage and extent of the decline of the British economy is measured by adding the increase in public debt/GDP since then to that figure. We as a nation are therefore in truth about 30+% poorer than before the idiotic, unnecessary and medically harmful lockdowns.
Most of that debt is owed to British citizens via pension funds etc. So the nation is not as a whole poorer.
Until they do a Gordon Brown and steal the pension funds
Private pensions are going to be ‘invested’ in green schemes. There is no public sector pension fund of course
“green” is simply the biggest rent-seeking scheme
The welfare state for the establishment.
I thik they’ve already done that.
“We’ve borrowed fiat from ourselves in order to take a massive national jolly in which real goods were not made and real services not provided, but it’s OK, we’ll print some more fiat later to pay ourselves back.”
It is debatable whether the tax-payer will ever have to pay back the money borrowed or even if it would be a good thing if they did.
https://www.prospectmagazine.co.uk/magazine/does-government-debt-matter-any-more-austerity-deficit-spending-borrowing
The key point is the absence of real production during our jolly. You can’t live in a house that didn’t get built, or drive a car that wasn’t made, no matter how you juggle the numbers in a spreadsheet.
I don’t dispute that. We can measure that by reduction in GDP. I just dispute using national debt to suggest that we as a nation are about 30+% poorer.
Give me all your money and I’ll write you an IOU so you’re not REALLY poorer.
The equivalent is for to write yourself an IOU and then spend the money you have lent yourself!
That’s called getting a new credit card and thinking you’ve got a payrise.
Not exactly – the credit card enables you to borrow from the bank, not from yourself. You will definitely have to pay it back
I think government debt is one of the hardest things to get your head round. However, as I replied to ThomasPelham it shouldn’t concern us too much.
No, of course not: we shall own nothing , and be happy!
Your friend spending his money to get your IOU counts towards GDP. That’s how stupid is using spending as a measure of economic growth.
All very well until the theorists realise that we’re not a abstract nation in isolation, but rely on the strength of our currency to buy in goods and services, and eventually those goods and services will notice that there’s a lot more money sloshing around and up their prices and refuse to loan us any more. Then it doesn’t really matter how much fake money we’ve lent ourselves, the entire edifice will crumble.
I wouldn’t panic. Our national debt is a much smaller proportion of GDP than at the end of the second world war: https://www.statista.com/statistics/282841/debt-as-gdp-uk/
This preceded a sustained period of growth until the 1970s (when debt was relatively low).
Yeah, you’re technically correct. However, there is serious government creative accounting to consider when looking at how GDP is now calculated. It has changed since ww2, which creates a seriously false picture (the same can be said for the official inflation figure, just to add).
Just one aspect of this creative accounting is something called ‘Imputed rent’. It’s a scandal really, but it helps project a narrative to the masses, so it is employed:
The problem that is Imputed Rent and hence GDP | Notayesmanseconomics’s Blog (wordpress.com)
That’s just one aspect of GDP calculations which is absurd. I trust government economic figures just as much as Imperial College’s modelling.
Creative accounting aside, you also have to consider the constraints (or anti currency manipulation) in the form of the Gold Standard the country was on at the time.
You actually could make a solid argument that the percentage of debt to GDP is actually higher now than it ever was.
Food for thought 😉
Thanks – that is an interesting link. I am not sure that imputed rent is necessarily a scandal. In theory at least, if you did not include imputed rent then whenever the council sold a rented house the GDP would drop. However, scandal or not. it only applies to the income measure of GDP and only accounts for about 2.5% of that.
I would be interested to see a solid argument that the percentage of debt to GDP is actually higher now than it ever was. It would need to show that GDP was actually less than 40% of the official figures!
And how is our welfare state looking compared to then? How many retired, and sick and sponging, and other economically inactive burdens are we shouldering?
I’d be delighted if we had the same demographics as attitudes as in 1946, but the story today is very different.
Debt is similar to the mid 60s, obviously a great time for the british economy. And at that point it was on a downwards trajectory, not upwards.
Fundamentally, if you increase the money supply (which this is doing) then you devalue the pound. MMT is great and all that if you like dangerously wishful thinking, but you can’t make funny money all day long and expect international clients to be happy.
What pension funds?
Ah, a MMT disciple.
Keep on working on your perpetuum mobiles.
I’ll do your washing, if you pay me a billion and I will pay you a billion if you will do mine. That way we can both become billionaires.
And what a boon to the economy!
Most here on LS are ‘educated’ so well aware that the next UK lockdown is only one quarter year away: https://www.conservativewoman.co.uk/readers-can-you-help/ This biosecurity-state-techno-investment-gene-therapy-total-surviellance reform is all about the 4IR reset and pushing swiftly to a zero carbon way of life for the 99%. Why does this agenda continue to roll along un-challenged by at least 60% of Brits? Because it would require them to quit listening to the 24/7 deadly variant brainwashing via the BBC/SKY and MSM news websites and engage in some independent critical thinking. When I see 20-30s avidly queuing for the vaxx kill shot, I truly despair. Why are they so blindly obedient? Because for now, on welfare/furlough/pension support they still sit-pretty and mainly comfy, so continue to abandon their once loved liberties, keep sacrificing humane self-preservation instincts, and just blindly accept that this NEW NORMAL smartphone trak/trace innovation however unnatural is for the collective greater good. It’s a pan boiling frog… drip…. drip… process. Simply put, we’re at war and if the ‘useless eater’ masses don’t swiftly wake the fux up soon… then the looming time coded UBI and bio-health-updates guarantee your future survival will only be allowed to continue for you and your… Read more »
https://phys.org/news/2021-06-decent-standards-global-energy.html
Here’s the PR for our impoverishment via CO2 homeopathy.
I had a quick skim read of that.
The author made the classic units of error of not specifying the time part.
They kept talking about “energy usage per person” ( in Gigajoules ) but did NOT state whether this was per year or per entire lifetime.
I suspect it was per year. But the fact the time element wasn’t even mentioned shows the Authors possible lack of deep understanding of the subject matter. Which is worrying. But nothing surprises me anymore 🤦♂️
Ah good, the first article sceptical of lockdowns, for a long time, so we are getting back to basics at last. So what do you know, lockdowns kill the economy, who’d of thought that locking people up in their own homes might do that?
I’m constantly amazed that so many observers, even the Bank of England, believe we can bounce back from this as if nothing ever happened. Surely the ongoing restrictions on international travel alone is enough to seriously damage our economy. And that’s before considering the impact of the debt we’ve piled up.
It was initially presented as being a ‘V’ shaped recovery wasn’t it?
Yes but remember the “independent” Bank of England does what it is told. The bosses there will say anything to please their employers!
It’s more of a central debt pricing bureaucracy than a bank too.
More Cloud cuckoo land is a state of absurdity… Wish you would stop stating the bloody obvious on the economy.
It came as a shock to her but my sister lost her job yesterday at a local big company along with many others who worked there – she had been with the company for around twelve years. Its been made clear that these job losses were due to the impact of lockdowns for most of last year and this year. Before the lockdowns the business was buzzing and in fact they were recruitng new staff to cope with demand. For much of last year she and the others employees there were all on furloe – they made it quite clear they were happy to be on furloe … being paid to stay at home – what a life! I did warn her that while this was all well and good that she could end up losing her job if the economy takes a dive due to the lockdowns – you can’t just switch the economy on and off when you feel like you know – but she dismissed it all as nonsense and was convinced that everything would be back to normal once again when the pandemic was over. Good ole Boris eh? Now she has no job and will… Read more »
🙁
Sorry for your sister. Furlough is one of the key things (along with the massive psychological brainwashing propaganda machine) that has allowed the government to get away with this shitshow for so long without public rioting.
People too stupid to realise that furlough is just unemployment by another name.
How stupid do you have to be to think that if you close your business for 3/6/12 months that all your customers will just come rushing back when/if you open again?
The rising proportion of furlough pay that the employers have to foot (as opposed to the Government) will no doubt produce some severe effects. Combine this with other withdrawals of local or Government supports e.g. business rates and the requirement to repay loans, and it looks like a real shitstorm coming. A lot of businesses won’t be able to afford constituents of
the measures, and as @A Heretic says, for those that stay afloat (just), they just won’t recover if their customer base is diminished; either because it’s too frit, unemployed and broke, or inflation has screwed their spending power.
https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme
My wife is an employment lawyer, those on furlough now need to wake up, their job is history. Businesses are laying the groundwork for redundancies whilst the lazy arses sit there thinking everything is rosy. I’ve zero sympathy too, they’re a large part of why we are screwed, too many braindead, lazy people happy to think they get something for nothing.
Home working is a huge risk too, once employers realise that the job being done in the UK from home can also be done from a call centre in India, that’ll be another group of lockdown lovers looking for work.
Turkey’s voting for Christmas, all whilst smugly hiding behind the covid bollocks. Fuck them.
Nothing compared to the coming Greta Depression though!
And bear in mind that the UK includes all income, including benefits, in GDP.
The more we pay people to not produce goods and services, the higher we claim our “productivity” is.
It’s oxymoronic in the extreme.
This has always been a very crude measure.
Staggering! Why aren’t people up in arms about this? The indifference is astounding.
The ignorance is even more astounding!
We have a socialist Parliament who love spending other people’s money
The Government sees that a lot of people have built up unusual levels of savings, and they are hoping for spend, spend, spend from these accounts soon to boost them. What do you guys think people will do?
I see that builders seem busy doing up houses.
Some people will give/lend money to children or relatives who have lost their jobs.
Some are having to spend on private medicine.
I am still thinking that large quantities of tinned food may be a way forward.
They keep talking about ‘boomers’ with money and planning ways to take it away, eye watering heating costs, food price increases due to deliberate shortages, travel costs etc
It looks like we can’t have a proper depression until we are out of this. Is that why they won’t let us out of this? Surely you can’t ignore the half a trillion pumped into the economy this last year?
Our economy has dropped by 10%. We’ve had to borrow another 50% but just ignore that as it doesn’t matter.