It might not be great, but it’s a whole lot better than the EU’s №1 economy Germany
No matter what you have read or been told The UK economy grew again in 2023.
On the same day that the news broke that the UK was in recession another news story broke about the Irish being in one. The difference is that the Irish had been in one for the whole of 2023.
Rejoiners might like to answer quite a simple question.
How did Ireland go into a recession after all it is in the EU, unlike the UK.
The latest GDP figures from the Office for National Statistics released on Thursday (15 Feb 2024) show a mixed picture but overall in 2023 the Brexit Britain economy grew by +0.1% on the ‘average measure’ and by +0.4% on the ‘output measure’.
Statisticians currently seem unable to make up their minds about which of the three measures of economic growth to use, so they average them. Below I summarise the average measure as well as the ‘output measure’. I am sure readers would prefer one definitive figure but it seems this is currently too difficult for the ONS.
The latest GDP figures
- All three measures of GDP fell in the final quarter of 2023
- However, this still left the UK in growth territory for the year overall
- GDP increased by 0.1% using the average measure
- It increased by 0.4% using the output measure
[Source: ONS, 15 Feb 2024.]
The mixed picture
On the positive side, UK business investment increased by 1.5% in Quarter 4 of 2023 and is 3.7% above where it was in the same quarter of 2022. Overall, annual UK business investment increased by 6.1% in 2023.
Preliminary estimates of output per hour worked decreased by 0.3% in Quarter 4 (Oct to Dec) 2023 compared with the same quarter a year ago but remained 2.0% above its pre-COVID-19 levels (2019 average level).
I also looked at exports. In Q4 2023 these increased by 8.1%, which is a positive sign and certainly shows that the country does not need to be in the EU’s Single Market to succeed.
Whilst the UK economy grew in 2023, there seems little doubt that economic performance fell in the second half of the year. There are of course many reasons for this — and none of them has anything to do with Brexit.
Who’s working and who isn’t?
Some economists have pointed to the growing numbers of people who have not rejoined the workforce following the lockdowns. Every country has its proportion of ‘the work-shy’ but it appears that the government’s excessive use of lockdowns produced a behavioural shift which must now be addressed.
I have analysed the latest ONS estimates for employed and ‘economically inactive’ persons. These have recently been revised upwards and I can reveal the results.
‘Working age’ persons (aged 16+)
- In employment: 33.1m
- Economically inactive: 9.25m
- Total: 21.8% of those aged 16+ are economically inactive
[Source: ONS, 05 Feb 2024.]
Naturally, many people are retired, like me for instance, as well as those in education and those who are genuinely incapacitated, but the above indicates the extent to which working people are carrying a significant proportion of the population aged 16 and over. This now stands at more than one in five and it is likely to grow as people live longer.
Things could be worse — we could be living in the EU
Below I publish the economic performance in 2023 of the EU’s economic powerhouse, Germany, which generates over 30% of the GDP of all 27 countries.
- Q1 : 0.3%
- Q2 : -0.4%
- Q3 : -0.7%
- Q4 : -0.4%
[Source: Official German Statistics agency, accessed 16 Feb 2024. Percentages are price-adjusted.]
have tried to present a more balanced picture than that which readers may have seen on some media channels such as the BBC in the last 24 hours. Inevitably I can only highlight some of the economic data published in the last month but I hope it is informative.
It is my opinion that the Bank of England bears a huge responsibility for the fact that the UK has not done better. It raised interest rates too late and it is too late in lowering them to stimulate the economy.
Equally, the government bears responsibility for its disastrous lockdowns, which have burdened us with huge debts. I sincerely hope that in his budget the Chancellor will slash corporation tax back to where it was, cut income tax, and dramatically restore tax thresholds to where they used to be, lifting millions out of inappropriately high tax brackets. All of this would stimulate growth.
Sadly, Mr Hunt, I will not be holding our breath.
I will finish by showing what Catherine Mann said in Washington this week. Mann works for the BoE and sits on the interest rate committee
Sources: Office for National Statistics | Destatis (German Federal statistics agency) | EU Commission | Catherine Man BoE
