An economy crib sheet

Bank of England interest rate
0.5%                It’s been at this level since March 2009, when it was cut by 0.5%.  In mid 08 it was 5.0%.
The Bank has made purchases of £375bn of mainly government bonds as part of its Quantitative Easing programme.
 
GDP growth
First quarter 2013                +0.3%
Twelve months to Q1           +0.6%
Since level before recession: -2.6%
 
Office for Budget Responsibility forecasts for GDP growth
2011       2012         2013       2014      2015      2016     2017
+0.9%     +0.2%       +0.6%     +1.8%     +2.3%    +2.7%    +2.8%
(actual)
 
Inflation
Consumer Price Index +2.4%              (12 months to April 13)
Retail Price Index                     +2.9%              (12 months to April 13)
 
Unemployment
ILO unemployment rate           +7.8%              (3 months average to March 13)
Unemployment number            2.5 million         (to March 13)
 
There are 29.7 million people in work, up over 400,000 over 12 months.
 
Wages
Average weekly earnings      +0.8%              (ex bonus, 3 month average annual, to March 13)
                                            +0.4%              (with bonus, as above)
 
House prices
Nationwide                           +0.9%              (year on year, April 13)
 
Office for Budget Responsibility forecasts on government borrowing
 
Deficit (annual borrowing) (underlying ie excluding Royal Mail and Asset Purchase Scheme transfers)
2011/2    2012/3    2013/4    2014/5    2015/6    2016/7     2017/8
£121bn    £121bn    £120bn    £108bn     £96bn      £67bn       £48bn
 
%GDP  7.9%          7.8%         7.5%        6.5%         5.5%         3.7%          2.3%
         (actual)
 
Public sector net debt % GDP
2011/2      2012/3     2013/4    2014/5    2015/6    2016/7     2017/8
            71.8%        75.9%        79.2%       82.6%      85.1%       86.5%       84.8%
 
 

Stephen Beer, 23/05/2013


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Drop in inflation rate

Yesterday the ONS released April's inflation data.  It showed a surprise fall in the Consumer Price Index to 2.4%, from 2.8%. Core inflation was 2.0%. The main reason for the fall in the annual rate was the negative contribution from transport costs - motor fuels and air fares.  That suggests the fall in the oil price has worked its way to the consumer.

Real incomes are still falling, with average wage inflation at 0.8% per year.  But this fall does alleviate the pressure a little.  The Bank of England, in its Inflation Report published last week, did revise down its inflation forecasts. More on this later.
 

Stephen Beer, 22/05/2013


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Credibility Deficit pamphlet remains relevant

Jeff Randall quotes reference to need to show we control spending

When I wrote The Credibility Deficit in 2011 I argued that to develop a more Keynesian economic policy would require Labour to be credible not only on debt but on spending too.  When we came to power in 1997 our public services had suffered years of underinvestment.  Not only were waiting times for hospital appointments months long, but the infrastructure was badly in need of renovation.  When I fought the 2001 election as a parliamentary candidate, we fought it on the theme of Labour investment versus Tory spending cuts.  This was a pretty good way of describing the inclination of each party.

But as I wrote in The Credibility Deficit, "The investment-versus-cuts argument lost power when people began to doubt the returns they would get from 'investing’ their income via taxation."  This is the line Jeff Randall quotes in the Daily Telegraph.  To move beyond this perception, Labour needs to demonstrate its spending will be effective, hence my argument for an Effective Spending Guarantee, where extra spending will be independently monitored.  We need this, or something like it, if we are to have the room for manoeuvre we need in fiscal policy.
 

Stephen Beer, 03/05/2013


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