Monthly GDP is estimated by the ONS to have grown by 0.1% in November 2022, which is slightly better than expected. Monthly GDP is now estimated to still be 0.3% below its pre-pandemic levels 3 years later. For the quarter GDP fell by 0.3% in the three months to November 2022. Unless there is a growth spurt the UK is likely to be officially in recession next month…

UPDATE: Sam Miley, Senior Economist at the Centre for Economics and Business Research, comments

“The UK economy unexpectedly grew in November, driven by an expansion in the services sector. Beneath the headline growth, there remains evidence of various headwinds impacting the economy, with a sharp monthly decline in manufacturing output being accompanied by a flatlining construction sector. Despite monthly growth in both October and November, a quarterly contraction in Q4 is still a possibility. In addition to continuing consumer and business pressures, the wave of industrial action witnessed at the end of 2022 will also have a downward effect on December’s GDP figures.”

This morning’s dismal revised ONS GDP data revealed that

• UK GDP fell by a revised 0.3% in Q3 (previously estimated to be a 0.2% decline).
• GDP is now at 0.8% below pre-pandemic levels (revised down from prior estimate of 0.4% below).
• Household spending dropping by 1.1% after inflation in Q3.

Liz Truss, despite the now prevailing derision towards her, was right: growth is more important than balancing the books in the short term. Guido doesn’t get the feeling that Sunak or Starmer are prioritising economic growth above political positioning. Britain will almost certainly be in recession in 2023 – what’s the growth plan?

Rishi says the illegal migrants issue is getting his focus in Downing Street, “I do think that the absolute priority that the British people have right now, as do I, is to grip illegal migration… I can tell you that I’ve spent more time working on that than anything else…”. Guido disagrees with his sense of priority. Economic decline is impacting on everyone’s living standards and the latest Ipsos MORI survey confirms people are far more concerned about the economy than immigration. We need to prioritise getting a grip on growth.

There is a rare sliver of good economic news this morning, as the ONS confirmed we are not currently in recession. The body has announced that a previous estimate that economic growth fell by 0.1% in the three months to June has been revised up to a rise of 0.2%, narrowly avoiding a second month of negative growth which would have defined the UK as in a recession. Small mercies…

The UK’s current account deficit has also improved, according to the revised figures, from the £43.9 billion previously calculated to a mere £33.8 billion.

Liz and Kwasi shouldn’t be too pleased, however. The ONS now also calculates that the UK economy has recovered less from the pandemic than previously believed and is now the only G7 country still languishing below pre-pandemic levels by 0.2% compared to the final quarter of 2019. The Queen’s death and subsequent economic pandemonium are expected to quash any hope of further good GDP news in the final two quarters of 2022…

The Office for National Statistics says the economy is essentially flat-lining:

• Gross domestic product (GDP) fell by 0.6% in June 2022, after growth of 0.4% in May 2022 (revised down from 0.5%), and was up 1.9% in the 12 months to June 2022.
• The Platinum Jubilee, and the move of the May bank holiday, led to an additional working day in May 2022 and two fewer working days in June 2022. This should be considered when interpreting the seasonally adjusted movements involving May and June 2022.
• Services fell by 0.5% in June 2022, and was the main driver of the fall in GDP. A decline in human health activities was the largest contributor as test and trace activity reduced further and vaccinations continued to tail off, following the spring booster campaign.
• Production fell by 0.9% in June 2022, following an increase of 1.3% in May. This was mainly because of a fall of 1.6% in manufacturing following strong growth in May 2022.
• Construction also fell by 1.4% in June 2022, following seven consecutive months of growth.
• Output in consumer-facing services remained flat in June 2022, following a fall of 0.3% in May. Consumer-facing services were 4.9% below their pre-coronavirus (COVID-19) levels (February 2020) in June 2022, while all other services were 2.7% above.

It should be noted that whilst the US entered a technical recession with two consecutive quarters of GDP contraction, their economy, like ours, is basically at full employment. It is also showing signs of bouncing. The US stock market is up 15% and the Federal Reserve is raising interest rates to cool inflation. If that is the template the UK follows, a recession – if it happens – should be short and shallow. 

The economy has shown resilience. Going forward the inflation shock from energy prices means GDP is expected to flatten, if not fall this year…

Gross domestic product (GDP) fell by a less than expected 0.2% in December 2021 to equal its pre-coronavirus pandemic level (February 2020). The consensus of economists was that GDP would fall 0.6%. Overall the UK economy recovered by 7.5% in 2021. The slight fall in December can be attributed to output in consumer-facing services falling by 3.0% in the month, mainly driven by a 3.7% fall in retail trade in the face of Omicron.

Pat McFadden, Labour’s Shadow Chief Secretary to the Treasury, responding to this morning’s weak GDP figures is audacious:

“The reality is the way the Government runs our economy is trapping us in a high tax, low growth cycle. Despite government bluster, with their current plans our position is not expected to improve. The latest Bank of England forecast suggests that growth will slow to a crawl next year. That would be the slowest growth of any G7 economy. Rising taxes, rising prices, and a squeeze on wages and living standards sit squarely on the shoulders of the Conservatives.”

Even if the low-tax rhetoric of Labour lacks credibility, it highlights the strategic Tory mistake of putting up taxes on workers and destroying their unique selling point as the party of low taxes. Labour points out that the Bank of England is predicting anaemic GDP growth could be as low as 1.25% for next year. The Tories choosing the high tax, low growth path is an open goal for Labour…