Economic Growth: More Optimistic Outlook Compared to BBC and Bank of England Reports
BBC the Bank of England and the new Labour Government are lying to us all.
The UK economy experienced a slowdown over the past year; however, it still achieved a real-term growth rate of 1%. This growth surpasses the average economic performance of the European Union during the same period.
Last Friday, November 15, 2024, the Office for National Statistics released its economic figures for the third quarter of 2024, covering July, August, and September. These figures revealed a 1.0% increase in real terms compared to the same quarter in the previous year. In terms of current prices, the economy grew by 3.4% compared to the same period in 2023. Instead of highlighting these significant trends, the BBC focused its headlines on short-term fluctuations, which often prove unreliable and are frequently revised upwards. I examined the raw data to offer readers a more comprehensive and responsible analysis, reflecting on the past year’s economic performance.
This analysis revealed several key insights. Firstly, the consistent year-over-year growth in real terms suggests underlying economic resilience, despite external challenges. The 3.4% growth in current prices indicates that inflationary pressures are being managed effectively, allowing for stable economic expansion. Furthermore, the focus on short-term fluctuations by major media outlets like the BBC may obscure the positive long-term trends that are evident in the data.
In addition to the overall growth figures, sector-specific performance was noteworthy. The manufacturing sector showed a robust recovery, contributing significantly to the GDP increase. This resurgence can be attributed to increased demand both domestically and internationally, coupled with improvements in supply chain efficiency. The services sector also demonstrated steady growth, driven by advancements in technology and increased consumer spending.
However, it’s crucial to acknowledge areas of concern. The construction sector faced challenges due to rising material costs and labour shortages, which could potentially hinder future growth if not addressed. Additionally, the retail industry, while showing some recovery, continues to adapt to changing consumer behaviours post-pandemic.
Looking ahead, policymakers should focus on sustaining this growth by investing in infrastructure, supporting innovation, and ensuring a skilled workforce. By addressing these areas, the economy can maintain its upward trajectory, benefiting businesses and citizens alike.
GDP in Current Prices (in billions)
Q3 2023: £685.2
Q4 2023: £677.2
Q1 2024: £688.1
Q2 2024: £702.9
Q3 2024: £708.8
The GDP for Q3 2024 rose by 3.4% compared to the same quarter in the previous year.
[Source: Office for National Statistics, 15 November 2024.]
The increase in GDP for Q3 2024 indicates a steady economic growth trajectory, reflecting resilience in key sectors such as technology, finance, and manufacturing. This growth can be attributed to increased consumer spending, a rise in export activities, and government initiatives aimed at boosting economic productivity. Analysts suggest that if this trend continues, the economy could see further expansion in the coming quarters, potentially leading to improved employment rates and higher levels of investment. However, they also caution about potential challenges such as inflationary pressures and global economic uncertainties that could impact future growth.
Nevertheless, here’s the BBC’s report on the matter.
Who needs enemies when we have the BBC
Technically the details in the BBC’s report are correct but once again it fails to present the bigger picture. It focuses on the 0.1% increase in real GDP over the last quarter. It therefore places the UK fifth in the G7 international league table. What it does not do is to show the growth in real GDP since the same quarter a year ago.
Monthly and quarterly GDP results are notoriously unreliable and are always revised by the Office of National Statistics. Instead of looking at the change based on the last quarter, below I am showing the international league table of the G7 over the last 12 months. This shows an increase in real GDP of 1% — 10 times the growth rate suggested by the BBC’s headline — and puts the UK in third place, not fifth.
% change in real GDP on a year ago — G7 countries and the EU27 average
- USA : 2.7%
- France : 1.3%
- UK : 1.0%
- EU27 avg : 0.9%
- Italy : 0.4%
- Japan : 0.2%
- Germany : -0.2%
- Canada : Yet to report
[Source : Office for National Statistics, 15 Nov 2024.]
The BBC report technically gets the details right, but it misses the broader context by focusing solely on a 0.1% increase in real GDP over the last quarter, which ranks the UK fifth in the G7 international league table. However, it neglects to highlight the growth in real GDP compared to the same quarter last year. Monthly and quarterly GDP figures are often unreliable and subject to revision by the Office of National Statistics. Instead of focusing on quarterly changes, let’s look at the G7 international league table over the past 12 months. This perspective shows a 1% increase in real GDP — ten times the growth rate mentioned in the BBC headline — and places the UK in third place, not fifth.
While the BBC report provides a snapshot of the UK’s economic performance, it’s essential to consider the broader trends and more stable annual data. The focus on short-term fluctuations can obscure more meaningful insights into the economy’s health. By examining the year-over-year growth rate, we gain a clearer picture of the UK’s economic standing. This longer-term view reveals that the UK has achieved a substantial 1% increase in real GDP over the past year, positioning it higher in the G7 rankings than the quarterly figures suggest. Such an analysis underscores the importance of looking beyond immediate data points to understand the true trajectory of economic performance.
Additionally, it’s crucial to recognize that economic indicators are often revised as more comprehensive data becomes available. This reinforces the argument for considering a wider range of data and timeframes when evaluating economic progress. By doing so, we can better assess the effectiveness of economic policies and the resilience of the economy in the face of global challenges.
Here is how the ONS summarised Friday’s results
“UK gross domestic product (GDP) is estimated to have increased by 0.1% in Quarter 3 (July to Sept) 2024, following growth of 0.5% in Quarter 2 (Apr to June) 2024.
“GDP is estimated to have increased by 1.0% in Quarter 3 2024, compared with the same quarter a year ago.
“Within the output approach to measuring GDP, the services sector grew by 0.1% on the quarter; the construction sector grew by 0.8%, while the production sector fell by 0.2%.
“Within the expenditure approach to measuring GDP, there was an increase in net trade, household spending, business investment, and government consumption in expenditure terms in the latest quarter.
“Nominal GDP is estimated to have increased by 0.8% in Quarter 3 2024, mainly driven by increases in compensation of employees and other income.
“Real GDP per head is estimated to have fallen by 0.1% in Quarter 3 2024, and is flat, compared with the same quarter a year ago.”
The latest growth figures from the ONS are certainly not any cause for celebration. That said, the UK’s economy still grew faster in real terms than the EU27 average over the past 12 months, and significantly faster than Germany, which has slumped.
With the new Government continually talking down the country’s economic prospects, and with the BBC seemingly delighting in reporting any bad news, I thought it might be helpful to present a more balanced picture, based on a more realistic perspective of the last 12 months rather than comparing the latest quarter to the preceding one.
It is of course perfectly reasonable to report on the latest developments in the economy. I would simply prefer that this be tempered with the longer-term picture and that it be put into perspective: “UK economy slows but still grew faster (1%) in real terms in last 12 months than EU average.”
Sources: ONS | EU Commission | House of Commons Library | OECD | IMF
