Growth Figures

These have turned out better than expected for the third quarter at 0.8%. Annualised that would come to 3.2%. Actual growth over the past twelve months is 2.8%. All this is very respectable, but the effect of the cuts is yet to feed into the economy, although those of the past year by Labour and the Coalition combined are as fierce in effect as those yet to impact. Cause for optimism certainly and favouring deficit hawks, but not so decisively as to give them the field. Yet.

It is interesting to compare what is happening here, with the U.S.. There the economy received such a record stimulus and government spending by the Federal authorities has reached such proportions, as to energise the battered Republican Party, give birth to the Tea Party and hazard the prospects for the Obama Administration in the mid- term elections. There is evidence of the economy failing to generate any momentum of its own and growth slowing, not because of cuts, but because the impact of spending measures is wearing off. Moreover the structural imbalances and fault lines remain much as they did at the beginning. Jobless totals are frightening and property prices continue to fall.

This suggests that without fundamental re-modellling, the old economic model is clapped out and no amount of spending will fire it up or keep it going, a view held by this Blog. By contrast the faults in the structure of the similar economic model employed in the U.K., in the lead up to the crash, are now correcting themselves. This is because the private sector and the ordinary working people have known for long what was wrong, but weighed down by the ever growing State, have been held back. The attack on big government and profligate spending by Whitehall, has energised everyone not engaged in it and the British economy, so long skewed from its potential by over-borrowing, quangos and co-ordinators, has started to break free.

It therefore looks as if we are doing better than the high spending America. It is no time, however, to be cocky. Without an American recovery at some point, our own will not sustain.