Is recession looming?

[dealtn]

The BoE seems far more concerned with appeasing politicians who are desperate that the UK electorate do not have to watch their UK house prices collapse too much before the next election.

On what evidence do you base your claim an independent central bank, and an MPC committee containing independent members, is more concerned with appeasing politicians than following its remit?

We can only go on the evidence of their actions, or in this case their lack of action.

With inflation at over 10%, and interest rates recently raised from only 1% to 1.25%, does the BoE really look as though it is 100% determined to fight this inflation? It certainly does not look like it.

Which is different to your original claim. Where is the evidence the members are more concerned with appeasing politicians?

I've met a number of them (past and present). I can't think of one that wouldn't challenge an allegation on their independent (of politicians) way of thinking.

And how would you measure their so called “Independence” anyway? It cannot be measured in any objective way. As I said, we can only go on the evidence of their actions.

So what evidence do you have to support a view that the BoE (or the MPC and its constituents) appease politicians? Where are any political speeches or policy recommendations from the BoE- let alone proponents of government support? Where is the BoE in attempting to design, or amend the remit of the MPC (presumably what you are referring to).

They have a remit, and attempt to meet it - often considered close enough to it not to merit further explanation, occasionally not.

[Tara]

On what evidence do you base your claim an independent central bank, and an MPC committee containing independent members, is more concerned with appeasing politicians than following its remit?

We can only go on the evidence of their actions, or in this case their lack of action.

With inflation at over 10%, and interest rates recently raised from only 1% to 1.25%, does the BoE really look as though it is 100% determined to fight this inflation? It certainly does not look like it.

Which is different to your original claim. Where is the evidence the members are more concerned with appeasing politicians?

I've met a number of them (past and present). I can't think of one that wouldn't challenge an allegation on their independent (of politicians) way of thinking.

And how would you measure their so called “Independence” anyway? It cannot be measured in any objective way. As I said, we can only go on the evidence of their actions.

So what evidence do you have to support a view that the BoE (or the MPC and its constituents) appease politicians? Where are any political speeches or policy recommendations from the BoE- let alone proponents of government support? Where is the BoE in attempting to design, or amend the remit of the MPC (presumably what you are referring to).

They have a remit, and attempt to meet it - often considered close enough to it not to merit further explanation, occasionally not.

From BoE website :

“We set monetary policy to achieve the Government’s target of keeping inflation at 2%.
Low and stable inflation is good for the UK’s economy and it is our main monetary policy aim.”

Inflation now : 10%
Interest rates now : 1.25%

So how does it look like they are doing with this remit now?

[dealtn]

We can only go on the evidence of their actions, or in this case their lack of action.

With inflation at over 10%, and interest rates recently raised from only 1% to 1.25%, does the BoE really look as though it is 100% determined to fight this inflation? It certainly does not look like it.

Which is different to your original claim. Where is the evidence the members are more concerned with appeasing politicians?

I've met a number of them (past and present). I can't think of one that wouldn't challenge an allegation on their independent (of politicians) way of thinking.

And how would you measure their so called “Independence” anyway? It cannot be measured in any objective way. As I said, we can only go on the evidence of their actions.

So what evidence do you have to support a view that the BoE (or the MPC and its constituents) appease politicians? Where are any political speeches or policy recommendations from the BoE- let alone proponents of government support? Where is the BoE in attempting to design, or amend the remit of the MPC (presumably what you are referring to).

They have a remit, and attempt to meet it - often considered close enough to it not to merit further explanation, occasionally not.

From BoE website :

“We set monetary policy to achieve the Government’s target of keeping inflation at 2%.
Low and stable inflation is good for the UK’s economy and it is our main monetary policy aim.”

Inflation now : 10%
Interest rates now : 1.25%

So how does it look like they are doing with this remit now?

Not currently meeting it. Consistent with what I have said.

Now again, just because they aren't meeting it, doesn't mean they aren't acting independently of the government. Nor does it even come close to your accusation of being mere interested in appeasing politicians, which yet again you have failed to back up with anything remotely looking like evidence.

It appears your interest here is solely to argue that house prices are too high, and perhaps that something should be done about it. I have no issue with someone making such a claim explicitly who is prepared to engage in discussion about it. However, to date, all you have suggested is a potentially libelous statement that independently appointed members of the MPC (sic) are under the influence of politicians. Providing no evidence to back up such a claim.

[Charlottesquare]

We can only go on the evidence of their actions, or in this case their lack of action.

With inflation at over 10%, and interest rates recently raised from only 1% to 1.25%, does the BoE really look as though it is 100% determined to fight this inflation? It certainly does not look like it.

Which is different to your original claim. Where is the evidence the members are more concerned with appeasing politicians?

I've met a number of them (past and present). I can't think of one that wouldn't challenge an allegation on their independent (of politicians) way of thinking.

And how would you measure their so called “Independence” anyway? It cannot be measured in any objective way. As I said, we can only go on the evidence of their actions.

And I said that the BoE “seems” far more concerned with appeasing politicians than really fighting inflation that is now over 10%. Anyway, that is certainly the way it appears to me and probably to many other people.

How long does each current monthly set of price increases remain within the current inflation measurement? Answer, 12 months, next month we drop June 2021, in August 2022 we drop July 2021 etc.

How long do interest rate increases take to slow the economy? Answer, usually quite a while.

It is all very well saying 11% inflation, must act now, must do large increase in rates, but the economy does not work with instant reaction and unless prices continue rising at their current rate (Are they going to or is energy price/food price shock a one off adjustment?) then bumping interest rates up for inflation that might not be there in 12 months, or certainly not to the same extent, could be a very bad plan.

Remember inflation is a rate of change measure, are prices going to continue to increase at the same rate is the question?

Correct, but the inflation % increase, although transient in the figures, continues to be there - unless that is we go into a phase of deflation which removes its effect.
Since we came off the gold standard, deflation now seems impossible to even contemplate, let alone impose.

I fail to see why the UK cannot have a similar inflation rate to that other self contained banking economy, Switzerland, which was 2.9% for the year to May 22. The GBP has lost so much value compared to the Swiss franc since I first was aware of it on my first trip to Switzerland in 1976. The Swiss nation appears to be happy. Why can't we run an economy like theirs?

I agree, you have what you have re prices, the price increases that have happened have happened, but heavily using a measure which may bite against future increases when you actually do not need it to bite as much is to me not a good idea.

I would be far more concerned if it were just UK plc in the grip of inflation, sterling taking a beating, but it is not (yet anyway) , it is in part surely world oil and food prices, these seem to make up a significant part of the current rate increases, and heavy interest rates increased as knee jerk reaction , if these do not carry on rising (and I really am not sure they will, but of course I do not know) ,stamping on interest rates ,all seems a bit like doing an emergency stop to avoid running over a rabbit. (Would be different if a deer)

I would prefer gradual squeezing rather than throttling.

[Charlottesquare]

We can only go on the evidence of their actions, or in this case their lack of action.

With inflation at over 10%, and interest rates recently raised from only 1% to 1.25%, does the BoE really look as though it is 100% determined to fight this inflation? It certainly does not look like it.

Which is different to your original claim. Where is the evidence the members are more concerned with appeasing politicians?

I've met a number of them (past and present). I can't think of one that wouldn't challenge an allegation on their independent (of politicians) way of thinking.

And how would you measure their so called “Independence” anyway? It cannot be measured in any objective way. As I said, we can only go on the evidence of their actions.

So what evidence do you have to support a view that the BoE (or the MPC and its constituents) appease politicians? Where are any political speeches or policy recommendations from the BoE- let alone proponents of government support? Where is the BoE in attempting to design, or amend the remit of the MPC (presumably what you are referring to).

They have a remit, and attempt to meet it - often considered close enough to it not to merit further explanation, occasionally not.

From BoE website :

“We set monetary policy to achieve the Government’s target of keeping inflation at 2%.
Low and stable inflation is good for the UK’s economy and it is our main monetary policy aim.”

Inflation now : 10%
Interest rates now : 1.25%

So how does it look like they are doing with this remit now?

What will rate of inflation be in 12 months time if the BOE do nothing , of your 10% how much is recurring (still in there) and how much one off shock, this is the real question. (Albeit wage demands may make things self fulfilling)

[AWOL]

I don't think the MPC is the villain here. I think we have a government that has no economic policy. It's trade policy was to leave the EU and the rest of the world would suddenly feel overwhelmed by the urge to buy British. Especially those in former colonies who have such fond memories of the British and our sense of fair play. Latterly they admitted that BREXIT would be bad for Growth but unveiled their secret weapon, namely Jacob Reese-Mogg Minister for Brexit Opportunities and Government Efficiency of the United Kingdom ("the honourable member for the 18th century"). Although his grandfather was a dairyman and lorry driver he seems to have lost his touch for both trade and the common man. In fact having a grandfather as a dairyman doesn't seem to have stopped the milk of human kindness from souring either.

So ultimately we are outperforming Russia (just not anyone else in the G20), have a currency that is behaving more like the Argentinian Peso than a reserve currency like the dollar/euro, and our government ministers are trying to convince us that it's all down to external factors such as oil, COVID, and Russia's invasion. However we are underperforming, have lagged the world in the global recovery from COVID and are now experiencing worse inflation than our peers.

I would love to point to a rising hope of British politics in the form of an intelligent, energetic, righteous young ray of light in the darkness but I have yet to see more than tantalizing glimmers that could be a mirage. Labour has nothing and the Liberals have dreams alone.

It's time for a grand strategy to see Britain maintain it's position in the world and not slip further into obscurity. We don't need the scale of Empire we just need sound economics and realistic expectations. We are being sold imperial opium dreams instead.

[Tara]

Which is different to your original claim. Where is the evidence the members are more concerned with appeasing politicians?

I've met a number of them (past and present). I can't think of one that wouldn't challenge an allegation on their independent (of politicians) way of thinking.

And how would you measure their so called “Independence” anyway? It cannot be measured in any objective way. As I said, we can only go on the evidence of their actions.

So what evidence do you have to support a view that the BoE (or the MPC and its constituents) appease politicians? Where are any political speeches or policy recommendations from the BoE- let alone proponents of government support? Where is the BoE in attempting to design, or amend the remit of the MPC (presumably what you are referring to).

They have a remit, and attempt to meet it - often considered close enough to it not to merit further explanation, occasionally not.

From BoE website :

“We set monetary policy to achieve the Government’s target of keeping inflation at 2%.
Low and stable inflation is good for the UK’s economy and it is our main monetary policy aim.”

Inflation now : 10%
Interest rates now : 1.25%

So how does it look like they are doing with this remit now?

Not currently meeting it. Consistent with what I have said.

Now again, just because they aren't meeting it, doesn't mean they aren't acting independently of the government. Nor does it even come close to your accusation of being mere interested in appeasing politicians, which yet again you have failed to back up with anything remotely looking like evidence.

It appears your interest here is solely to argue that house prices are too high, and perhaps that something should be done about it. I have no issue with someone making such a claim explicitly who is prepared to engage in discussion about it. However, to date, all you have suggested is a potentially libelous statement that independently appointed members of the MPC (sic) are under the influence of politicians. Providing no evidence to back up such a claim.

The BoE should have been watching both inflation and house prices since they became “independent”.

Inflation at 10% hurts the very poorest in society the most, and UK house prices at 10 or 12 times the average UK income hurts most of the young people and the next generations who are priced out of the housing market.

When the BoE have successfully got inflation back to under 2%, and UK house prices back to an affordable level for the young people and the next generations, I may change my opinions.

[dealtn]

The BoE should have been watching both inflation and house prices since they became “independent”.

Inflation at 10% hurts the very poorest in society the most, and UK house prices at 10 or 12 times the average UK income hurts most of the young people and the next generations who are priced out of the housing market.

When the BoE have successfully got inflation back to under 2%, and UK house prices back to an affordable level for the young people and the next generations, I may change my opinions.

The BoE has no such focus on house prices. Further according to its remit the MPC shouldn't target house prices either. House prices are only very obliquely relevant whether you think they should be or not.

[AWOL]

The BoE has no such focus on house prices. Further according to its remit the MPC shouldn't target house prices either. House prices are only very obliquely relevant whether you think they should be or not.

House prices tend to be governed more by political matters like various help to buy schemes, MIRAS, etc. that seek to gain votes by claiming to help people (especially "first time voters/buyers") whilst just further inflating house prices. However higher interest rates are likely to take the heat out of the housing market. It will also help Londongrad prices that Oligarchs and there oriental equivalents no longer feel their assets are safe.

The other thing that helps house prices is a planning system that inhibits building new houses as people like me don't want our views of our country idyll ruined by an estate of boilerplate houses.

A good first step would be for politicians to finally stop offering extra money that benefits the sellers of houses. In addition perhaps stamp duty shouldn't apply when people down size, or should be scrapped altogether as it is just sand in the property system. Consequently older people would be more likely to down size and find themselves with houses they can heat and clean more easily.

[Spet0789]

We can only go on the evidence of their actions, or in this case their lack of action.

With inflation at over 10%, and interest rates recently raised from only 1% to 1.25%, does the BoE really look as though it is 100% determined to fight this inflation? It certainly does not look like it.

Which is different to your original claim. Where is the evidence the members are more concerned with appeasing politicians?

I've met a number of them (past and present). I can't think of one that wouldn't challenge an allegation on their independent (of politicians) way of thinking.

And how would you measure their so called “Independence” anyway? It cannot be measured in any objective way. As I said, we can only go on the evidence of their actions.

And I said that the BoE “seems” far more concerned with appeasing politicians than really fighting inflation that is now over 10%. Anyway, that is certainly the way it appears to me and probably to many other people.

How long does each current monthly set of price increases remain within the current inflation measurement? Answer, 12 months, next month we drop June 2021, in August 2022 we drop July 2021 etc.

How long do interest rate increases take to slow the economy? Answer, usually quite a while.

It is all very well saying 11% inflation, must act now, must do large increase in rates, but the economy does not work with instant reaction and unless prices continue rising at their current rate (Are they going to or is energy price/food price shock a one off adjustment?) then bumping interest rates up for inflation that might not be there in 12 months, or certainly not to the same extent, could be a very bad plan.

Remember inflation is a rate of change measure, are prices going to continue to increase at the same rate is the question?

Correct, but the inflation % increase, although transient in the figures, continues to be there - unless that is we go into a phase of deflation which removes its effect.
Since we came off the gold standard, deflation now seems impossible to even contemplate, let alone impose.

I fail to see why the UK cannot have a similar inflation rate to that other self contained banking economy, Switzerland, which was 2.9% for the year to May 22. The GBP has lost so much value compared to the Swiss franc since I first was aware of it on my first trip to Switzerland in 1976. The Swiss nation appears to be happy. Why can't we run an economy like theirs?

We could start by (re-)joining the single market and Schengen. Having an open economy is a big part of Switzerland’s success, along with a culture of public and private sector investment.

[Nimrod103]

Which is different to your original claim. Where is the evidence the members are more concerned with appeasing politicians?

I've met a number of them (past and present). I can't think of one that wouldn't challenge an allegation on their independent (of politicians) way of thinking.

And how would you measure their so called “Independence” anyway? It cannot be measured in any objective way. As I said, we can only go on the evidence of their actions.

And I said that the BoE “seems” far more concerned with appeasing politicians than really fighting inflation that is now over 10%. Anyway, that is certainly the way it appears to me and probably to many other people.

How long does each current monthly set of price increases remain within the current inflation measurement? Answer, 12 months, next month we drop June 2021, in August 2022 we drop July 2021 etc.

How long do interest rate increases take to slow the economy? Answer, usually quite a while.

It is all very well saying 11% inflation, must act now, must do large increase in rates, but the economy does not work with instant reaction and unless prices continue rising at their current rate (Are they going to or is energy price/food price shock a one off adjustment?) then bumping interest rates up for inflation that might not be there in 12 months, or certainly not to the same extent, could be a very bad plan.

Remember inflation is a rate of change measure, are prices going to continue to increase at the same rate is the question?

Correct, but the inflation % increase, although transient in the figures, continues to be there - unless that is we go into a phase of deflation which removes its effect.
Since we came off the gold standard, deflation now seems impossible to even contemplate, let alone impose.

I fail to see why the UK cannot have a similar inflation rate to that other self contained banking economy, Switzerland, which was 2.9% for the year to May 22. The GBP has lost so much value compared to the Swiss franc since I first was aware of it on my first trip to Switzerland in 1976. The Swiss nation appears to be happy. Why can't we run an economy like theirs?

We could start by (re-)joining the single market and Schengen. Having an open economy is a big part of Switzerland’s success, along with a culture of public and private sector investment.

And the single market and Schengen account for the low inflation rate in the EU? Except the figure for May 22 was 8.1%.

[vand]

the classic US 10y/2y spread is now deeply inverted.
The markets are indicating that a US recession is now a slam dunk

https://fred.stlouisfed.org/series/T10Y2Y

[1nvest]

The BoE should have been watching both inflation and house prices since they became “independent”.

Inflation at 10% hurts the very poorest in society the most, and UK house prices at 10 or 12 times the average UK income hurts most of the young people and the next generations who are priced out of the housing market.

When the BoE have successfully got inflation back to under 2%, and UK house prices back to an affordable level for the young people and the next generations, I may change my opinions.

The BoE has no such focus on house prices. Further according to its remit the MPC shouldn't target house prices either. House prices are only very obliquely relevant whether you think they should be or not.

Is fast/hard inflation that bad? Prices rising 50% over a year or two, or over 20 years (2%/year). If a central bank prints/spends - that induces inflation (devaluation of all other notes in circulation), provided wages/pensions also are lifted in reflection then domestically that's zero sum. Predominately seems to me to be more a case of external factors, imports/exports. If with high inflation the currency declines relative to others, imports cost more inducing a tendency for increased domestic production/purchasing. Russian gas prices double, greater inclination/incentive to become more self sufficient on the energy front (wind/wave/whatever).

The bad aspect is that the government direct to cuts. Not increasing benefits/pensions/wages in reflection of the inflation rate. 10% inflation, 5.2 weeks/year = average holiday entitlement cost, 5% pay rise, 2.6 weeks ... and disgruntled employees in having had half their former holiday entitlement being removed.

Population reduction lowers demand for housing. 4 billion global population doubling relatively quickly to 8 billion, and then on to 16 billion, will naturally see increased demand/migrations, more congestion, lower productivity ...etc. The UK opening migration floodgates since the 1960's is seeing over-population/congestion/reduced productivity. Many non-third generation British working in care, to care for many non-third-gen patients. Contrast that with Japan, where social policy is more against migration (to instead look towards technology at addressing demographics/ageing population).

Increasing UK GDP via doubling the population to 130 million should not be a aspiration.

[1nvest]

So ultimately we are outperforming Russia (just not anyone else in the G20), have a currency that is behaving more like the Argentinian Peso than a reserve currency like the dollar/euro, and our government ministers are trying to convince us that it's all down to external factors such as oil, COVID, and Russia's invasion. However we are underperforming, have lagged the world in the global recovery from COVID and are now experiencing worse inflation than our peers.

I would love to point to a rising hope of British politics in the form of an intelligent, energetic, righteous young ray of light in the darkness but I have yet to see more than tantalizing glimmers that could be a mirage. Labour has nothing and the Liberals have dreams alone.

It's time for a grand strategy to see Britain maintain it's position in the world and not slip further into obscurity. We don't need the scale of Empire we just need sound economics and realistic expectations. We are being sold imperial opium dreams instead.

The core UK flaw is Parliament. A liability not a asset, more often just managing crises of its own making, rather than a technocratic presidential proportional representation system - that plans 10, 20, 50 years ahead rather than from one 5 years to the next. The longer the continuation of the Con/Lab yo-yo, the deeper the UK will decline. The majority of the electorate just can't be bothered with that yo-yo, facilitating its continuation rather than opting to replace it (government in office might be there despite fewer than one in five of the population having voted for it).

[Itsallaguess]

Some news from the BBC this morning -

The UK economy shrank between April and June, official figures show -

The economy contracted by 0.1% in the second quarter of the year, the Office for National Statistics (ONS) said.

That compares to the first three months of this year when gross domestic product (GDP) - which measures economic activity - grew.

The Bank of England has forecast the UK will fall into recession towards the end of this year and the downturn will last for the entirety of next year.

As well as releasing figures for the second quarter, the ONS also announced that the economy shrank by 0.6% in June due to the extra bank holiday to celebrate the Queen's Platinum Jubilee.

Commenting on the 0.1% contraction between April and June, the ONS said that the biggest contributor was from "human health and social work activities" as Covid test and trace and vaccination programmes were wound down.

However, it said areas such as tourism, bars and entertainment showed strong growth.

"Health was the biggest reason the economy contracted as both the test and trace and vaccine programmes were wound down, while many retailers also had a tough quarter," said Darren Morgan, director of economic statistics at the ONS.

https://www.bbc.co.uk/news/business-62504789

So if 'the biggest contributor [to this drop] was from "human health and social work activities" as Covid test and trace and vaccination programmes were wound down', doesn't that particular COVID-related aspect point to some level of 'recessionary spike' that would be expected to drop out of future calculations, and where those areas of the economy that are showing good growth above are likely to feed into improved figures once we work ourselves away from those previously high-spending COVID-related aspects, and where the additional Jubilee bank holiday won't also be a drag on future calculations?

Link to June ONS report - https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/latest

Cheers,

Itsallaguess

[Dod101]

Some news from the BBC this morning -

The UK economy shrank between April and June, official figures show -

The economy contracted by 0.1% in the second quarter of the year, the Office for National Statistics (ONS) said.

That compares to the first three months of this year when gross domestic product (GDP) - which measures economic activity - grew.

The Bank of England has forecast the UK will fall into recession towards the end of this year and the downturn will last for the entirety of next year.

As well as releasing figures for the second quarter, the ONS also announced that the economy shrank by 0.6% in June due to the extra bank holiday to celebrate the Queen's Platinum Jubilee.

Commenting on the 0.1% contraction between April and June, the ONS said that the biggest contributor was from "human health and social work activities" as Covid test and trace and vaccination programmes were wound down.

However, it said areas such as tourism, bars and entertainment showed strong growth.

"Health was the biggest reason the economy contracted as both the test and trace and vaccine programmes were wound down, while many retailers also had a tough quarter," said Darren Morgan, director of economic statistics at the ONS.

https://www.bbc.co.uk/news/business-62504789

So if 'the biggest contributor [to this drop] was from "human health and social work activities" as Covid test and trace and vaccination programmes were wound down', doesn't that particular COVID-related aspect point to some level of 'recessionary spike' that would be expected to drop out of future calculations, and where those areas of the economy that are showing good growth above are likely to feed into improved figures once we work ourselves away from those previously high-spending COVID-related aspects, and where the additional Jubilee bank holiday won't also be a drag on future calculations?

Cheers,

Itsallaguess

The drop in 'human health and social work activities have been mentioned before. They have surely nothing to do with any normal assessment of GDP. There is no denying the lack of sensible leadership in Government but it is also all too easy for some of those with the most opinionated views to write the most pessimistic stuff on forums like this.

Dod

[servodude]

doesn't that particular COVID-related aspect point to some level of 'recessionary spike' that would be expected to drop out of future calculations,

I guess that depends on whether it you look at it a being an input or an output; was the Govt spending going in to the economy, or being a drag on the balance sheet, or both (given the multifarious ways of calculating GDP)?

Is its cessation a reduction in cost or in stimulus?

Or just an artifact of looking at this stuff a bit too closely at a time scale that doesn't really make sense even if it's convenient

[Itsallaguess]

So if 'the biggest contributor [to this drop] was from "human health and social work activities" as Covid test and trace and vaccination programmes were wound down', doesn't that particular COVID-related aspect point to some level of 'recessionary spike' that would be expected to drop out of future calculations, and where those areas of the economy that are showing good growth above are likely to feed into improved figures once we work ourselves away from those previously high-spending COVID-related aspects, and where the additional Jubilee bank holiday won't also be a drag on future calculations?

The drop in 'human health and social work activities have been mentioned before.

They have surely nothing to do with any normal assessment of GDP.

Which was the point I was trying to make - the legacy COVID health-related 'activities' dropping out of the most recent GDP figures are clearly having a pronounced effect on the current 'recessionary' ONS figures, but there would be a valid view to be taken on that phenomenon that might suggest that if they *weren't* having such a pronounced effect, then that might show that we weren't spending enough on those COVID-related activities as we *should* have been doing...

There's a lot to be said for the 'we're in danger of talking ourselves into a recession' argument, and I think aspects such as this go some way to explain that, because we're currently in a comparative situation with regards to these types of GDP figures that are well outside what we might consider 'normal' in terms of injected influence* on previous comparative GDP figures...

Cheers,

Itsallaguess

* Yeah - probably not the best metaphor in relation to COVID-induced spending, I'll admit...

[Dod101]

So if 'the biggest contributor [to this drop] was from "human health and social work activities" as Covid test and trace and vaccination programmes were wound down', doesn't that particular COVID-related aspect point to some level of 'recessionary spike' that would be expected to drop out of future calculations, and where those areas of the economy that are showing good growth above are likely to feed into improved figures once we work ourselves away from those previously high-spending COVID-related aspects, and where the additional Jubilee bank holiday won't also be a drag on future calculations?

The drop in 'human health and social work activities have been mentioned before.

They have surely nothing to do with any normal assessment of GDP.

Which was the point I was trying to make - the legacy COVID health-related 'activities' dropping out of the most recent GDP figures are clearly having a pronounced effect on the current 'recessionary' ONS figures, but there would be a valid view to be taken on that phenomenon that might suggest that if they *weren't* having such a pronounced effect, then that might show that we weren't spending enough on those COVID-related activities as we *should* have been doing...

There's a lot to be said for the 'we're in danger of talking ourselves into a recession' argument, and I think aspects such as this go some way to explain that, because we're currently in a comparative situation with regards to these types of GDP figures that are well outside what we might consider 'normal' in terms of injected influence* on previous comparative GDP figures...

Cheers,

Itsallaguess

* Yeah - probably not the best metaphor in relation to COVID-induced spending, I'll admit...

Yes I recognised that. This has been discussed before, maybe in last month's GDP figures. In a tight labour market dropping that sort of activity (which of course does nothing for actual productivity) ought to be regarded as a good thing, or we might just as well set the labour force to dig holes and fill them in again.

Dod

[Nimrod103]

I suspect this is a case of where things move much more slowly than people expect. Because everyone is expecting a recession, they think these figures for the last three months is the beginning of it. Some people are already looking beyond and expecting inflation to drop and asking why interest rates need to continue going up. These people include the BoE monetary policy committee.

I, OTOH, see these figures as evidence that interest rates must still be pushed up because inflationary pressures are still very strong. I note one of the Fed regional chairmen said much the same about the USA yesterday. He expected interest rates to keep steadily increasing for a year or two to rein in inflation.