Understanding the significance of George Osborne’s Autumn Statement is complicated by political posturing. These eight charts will enable you to cut through the spin and surprise people with knowledge of what really matters.
1. Forget the announcements Read more
The British economy is stuttering back into life, with GDP growth beginning to pick up pace and a shrinking deficit giving George Osborne reason to smile ahead of Thursday’s Autumn Statement.
FT economics editor Chris Giles explains the economic backdrop to the Autumn Statement and the options open to the chancellor. Read more
Real business investment grew 1.4 per cent in the third quarter, prompting many City economists such as Howard Archer of IHS Global Insight to welcome the fact that “business investment is finally kicking in”. If so, that is hugely important to the UK economic debate. Investment growth will enable the recovery to rebalance away from squeezed households who cannot easily borrow more and more to support spending for a lot longer, exporters whose prospects depend to a large extent on the still-troubled eurozone, and the government which will continue its austerity drive.
The following five charts about business investment should make you pause for thought and raise quite a few questions about data reliability as highlighted by the Bank of England governor on Tuesday.
Investment in buildings, plant and machinery did not drive Q3 growth
Far from investment being important to the 0.8 per cent real growth and 1.7 per cent nominal growth in the third quarter, this chart shows that the good growth figures were almost entirely generated by household consumption and a build-up of unsold stocks within companies. Investment contributed only 0.1 percentage points to the 0.8 per cent growth. Read more
The Bank of England is a powerful organisation, which rarely hears criticism from insiders or outsiders because economists are quite polite people.
A leading economist I respect sent me these views on the communication of forward guidance, but did not want to be identified. I thought they deserved an airing. So in the style of the secret footballer, here the “secret economist” compares what senior BoE officials say about guidance with what they mean.
What we say … and what we mean
This is the right policy for a recovery … Please forget all that stuff about guidance is the right policy for an economy that is flat-lining.
We have made policy more effective …We can’t explain how. This statement sounds like code for a change in the stance of policy, but we don’t want to re-open that can of worms.
By Robin Wigglesworth
A slew of economic news and data has come out over the past 24 hours, some good, some bad, and some outright ugly. But if one thing is clear, the economic recovery of advanced economies is far from assured. Here are five highlights, and things to keep in mind.
1: Markets believe the Fed will keep stimulating the economy
Janet Yellen, the nominee for the Federal Reserve chairmanship, will highlight now the US economy is performing “far short” of its potential at her Senate testimony on Thursday, according to prepared remarks released on Wednesday evening. Deutsche Bank’s Jim Reid points out that while the “tones are certainly dovish, it’s impossible to infer precise policy thoughts from her remarks”. That hasn’t stopped financial markets from rallying on the hope that the presumptive new Fed chairwoman will keep pumping money into the global economy for longer than previously expected. Read more
The well-worn chart below is often taken to show chronic lack of effective demand in the economy. It shows the level of gross domestic product (in red) alongside a trend line from 1997 to 2008 (in blue). Output is now 18 per cent below the previous trend and this purports to signal the failure of the British authorities to stimulate the economy sufficiently over the past five years.
Industrial production and manufacturing figures for September were published by the Office for National Statistics this morning. They showed manufacturing picked up in September a little more than the statisticians had expected when they estimated third quarter economic growth, but not enough to trigger a revision to the 0.8 per cent initial growth estimate. The following five charts add some detail and put the figures in context.
1. Manufacturing still has a long way to recover Read more
So, the International Monetary Fund is upbeat on the growth outlook for Sub-Saharan Africa. But its biannual outlook for the region flags some big bumps on the way – not least that it is increasingly vulnerable to external shocks. Here are five key points from the paper.
1 – “Africa rising” is on track
The region will account for 2.63 per cent of the global economy in 2014 (measured by purchasing power parity). While that might not sound like much, it will be the largest share it has taken for more than three decades. However, the region’s population accounts for 13 per cent of the global total, underscoring just how far there is to go. Read more
This morning the Bank of England published its monthly Bankstats. These are a treasure trove of information with the headline data showing mortgage approvals at their highest rate since 2008. But the BoE release contains much more information than that, which is summarised in the following four charts. These are better than the charts the BoE publish in their press releases as they show a much longer time series and attempt to put the figures into context.
1. Mortgage approvals Read more
The Office for National Statistics reported today that the economy grew 0.8 per cent in the third quarter of the year. Here are six charts which explain the importance of the data
1. Growth is back at normal levels Read more