Day after day, day after day,We stuck, nor breath nor motion;As idle as a painted shipUpon a painted ocean.
[The Rime of the Ancient Mariner, Samuel Taylor Coleridge]
The UK economy remains stuck. Last Friday, the latest GDP numbers for the UK (first estimate for Q1 2023) from the Office for National Statistics (ONS) indicate that the UK economy is still a little shy of where it was back in late 2019, still down by 0.5% on Qs 3 and 4 of that year.  The economy in Q1 was just 0.2% larger than in the same quarter a year ago.
The table below (which excludes the pandemic-affected years 2020 and 2021) gives the quarterly GDP figures (in £ millions, base year 2019) for Qs 3 and 4 of 2019, and all four quarters of 2022, as follows (source ONS):
Beneath the painted ocean, however, there are some

There are still a lot of arguments on Twitter as to whether the UK is doing ‘better’ or ‘worse’ in terms of GDP than, in particular, our EU neighbours, and the G7 in general.  (Yes we know GDP is a wholly inadequate measure, but it’s still the common currency in our political debate, and we don’t want to leave the field to the false claims of others).

Today, dear old Liam Halligan, now to be found wandering the arid deserts of GB News and the Daily Torygraph, has valiantly tried to lift Brexiter morale with a statistically misleading tweet and chart:

Many are those who replied to Liam pointing out that the UK’s ‘chalked up’ performance in 2022 was wholly due to having fallen further GDP-wise than other countries in 2020 – something that Halligan knew very well already. Though

Another week goes by.  Hundreds of thousands of workers, mainly public sector, on strike last week, and again this week. Pay deals way below inflation. Zero movement from government.  Continuing disruption and decay. Why can’t a settlement be reached?
Just before Christmas, Prime Minister Sunak told us

“I want to make sure that we reduce inflation and part of that is being responsible in setting public sector pay..”

On 1st February, Mr Sunak’s Official Spokesman said

“We want to have further talks with the unions.  Some of these discussions have been constructive. We have to balance that against the need to be fair to all taxpayers, the majority of whom don’t work for the public sector.”

So two distinct arguments from government – to settle the current year public sector pay disputes

Our new research report, published today, looks at the state of the UK’s labour market, based on the most recent data from the Office for National Statistics. It compares these recent data with those from 2019, and sometimes with earlier data. You can download the report here.
The report looks at a wide range of issues, including size of the workforce, the economically active and inactive, employees and self-employed, full and part-time workers. It also examines data on developments in nominal and ‘real’ (after allowing for inflation) pay. It shows that over a long period, the sector of the workforce whose pay has increased by far the most is the Finance & Business sector. The sectors that have relatively declined in pay are manufacturing, the public sector, and those in the ‘wholesale /

In this article I look mainly at the UK’s GDP position. While the ONS first estimate for Q1 2022 shows that it is now 0.6% higher than the pre-pandemic peak in Q3 of 2019, this is entirely down to increased government consumption and investment, mainly health-related. But for this real-terms increase, the economy (measured in GDP) would be some 2% smaller now, even before the cost-of-living crisis hits us fully, and before government and Bank of England tighten fiscal and monetary policy simultaneously.  In a second article, I will seek to analyse this week’s labour market statistics and their significance for policy.
We’ve now had the UK’s GDP and labour market estimates from the Office for National Statistics for the first quarter (Q1) of 2022, plus the April stats for inflation, so we

Many years ago, on family holiday in Wales, a problem arose when my father tried to turn our car and caravan around in an urban street.  A man noted generally for his calmness, Dad had got out and started looking at whatever the problem was.  My brother and I (ages 14 and 12) stayed in the back seat chatting away inconsequentially but, it seems, annoyingly.  
Suddenly, Dad’s patience broke – “GET OUT AND DO SOMETHING!” he boomed.  Unaccustomed to such temper-induced imperatives, we leapt out into the street, examined the situation without having a clue what to do, and tried to look as though we were doing something helpful.  Dad soon calmed down, and somehow the problem was resolved.
Last Wednesday’s Bank of England Monetary Policy report and MP Committee decisions brought this old memory

It looks as if the UK’s GDP will have risen by a little over 7% in 2021, after a fall now estimated at 9.4% in 2020. (We await the Q4 data).  It seems that – despite stronger November data – GDP in 2021 will come in below that of 2019, and maybe a tad less than 2018.  Clearly COVID has played a major part, but is there also evidence of Brexit-induced slowdown in the mix?
The “Conservative Home” website (among so many other right-wing propaganda outlets) tries hard to keep spirits up and the – ever-receding – vision of post-Brexit economic success alive.  Here’s Harry Phibbs (3rd January):
“The UK’s economy continued to grow – by 2.3 per cent in 2016, 2.1 per cent in 2017, 1.7 per cent in 2018, and 1.7 per cent in 2019. True, it fell in 2020, by 9.7 per cent –  but that was due to the

A couple of weeks ago, my old shower broke down, needing replacement. Chatting to bathroom-kitchen store manager, I learnt that business was brisk for them, especially the demand for new bathrooms.  In fact, very brisk. Lots of people wanting new bathrooms for their holiday to-be-let homes, with higher rents in mind, as well as for actually lived-in homes. His order book is far stronger than in ‘normal’ times.
For those who ‘have’, the times are not – financially speaking – bad at all.
All this is mainly planned substitute spending; instead of overseas holidays, frequent eating out or public entertainment, many are choosing new home improvement projects.
Finding the money is unlikely to be a problem for this segment of the population.  In a recent speech, Bank of England Chief Economist

A couple of weeks ago, my old shower broke down, needing replacement. Chatting to bathroom-kitchen store manager, I learnt that business was brisk for them, especially the demand for new bathrooms.  In fact, very brisk. Lots of people wanting new bathrooms for their holiday to-be-let homes, with higher rents in mind, as well as for actually lived-in homes. His order book is far stronger than in ‘normal’ times.
For those who ‘have’, the times are not – financially speaking – bad at all.
All this is mainly planned substitute spending; instead of overseas holidays, frequent eating out or public entertainment, many are choosing new home improvement projects.
Finding the money is unlikely to be a problem for this segment of the population.  In a recent speech, Bank of England Chief Economist

In 2020, GDP per head of population fell, year on year, by a massive 10.5%. For me, that’s the  take-away statistic from last Friday’s GDP-related ‘data dump’ by ONS.  The level of GCDP per head (in real, inflation-adjusted terms) was £29,124.  This was almost identical to the level in 2009 (£29,098), at the peak of the global financial crisis, and otherwise the lowest on record since 2003. 
Of course, the extent of the decline is heavily down to the government’s  first lockdown restrictions, which fell mainly in Q2.  But even the Q4 estimate of £7,456 per head (8.3% below Q4 2019) is still the lowest for that quarter since 2011 – and indeed lower than the Q4 figures for 2005-2007.
‘Real’ GDP is estimated to have fallen 9.9% for the year 2020, which may have caused relief for government

As 2020 draws to a close, and with a new US President due to take office in a few weeks, we want to mark – if a little late in the year – the 80th anniversary of Karl Polanyi’s five lecture series at Bennington College, Vermont, which he called “The Present Age of Transformation”.  PRIME is proud to have published these in pdf format back in February 2017, with the much appreciated consent of the college, which ‘houses’ the original lecture manuscripts.  We were particularly delighted that Karl’s daughter, Kari Polanyi-Levitt, a great progressive thinker in her own right, honoured us with an introduction.
The lectures are fascinating in the insight they give into Polanyi’s thinking as he worked on what was to become his masterpiece, “The Great Transformation”, published in 1944.  The

As 2020 draws to a close, and with a new US President due to take office in a few weeks, we want to mark – if a little late in the year – the 80th anniversary of Karl Polanyi’s five lecture series at Bennington College, Vermont, which he called “The Present Age of Transformation”.  PRIME is proud to have published these in pdf format back in February 2017, with the much appreciated consent of the college, which ‘houses’ the original lecture manuscripts.  We were particularly delighted that Karl’s daughter, Kari Polanyi-Levitt, a great progressive thinker in her own right, honoured us with an introduction.
The lectures are fascinating in the insight they give into Polanyi’s thinking as he worked on what was to become his masterpiece, “The Great Transformation”, published in 1944.  The

On Wednesday (30 September) the Office for National Statistics published its second estimate of GDP for the second quarter of 2020, April to June.  The very marginally positive news is that the fall, between Q1 and Q2, was reduced from 20.4% to 19.8%.  Since this was still the largest recorded quarterly fall since records commence in 1955, this is hardly a cause for jubilation – and even less so since the Q1 drop was raised from -2.2% to -2.5%.
As we discuss below, the position would arguably be still worse, save for the curious treatment of ‘imputed rent’ for houseowners, which – as a purely fictional or metaphysical element – nonetheless forms an inordinately large chunk of GDP.
Looking at the path of the UK’s economic progress in recent years, we may note that the percentage rate of

On Wednesday (30 September) the Office for National Statistics published its second estimate of GDP for the second quarter of 2020, April to June.  The very marginally positive news is that the fall, between Q1 and Q2, was reduced from 20.4% to 19.8%.  Since this was still the largest recorded quarterly fall since records commence in 1955, this is hardly a cause for jubilation – and even less so since the Q1 drop was raised from -2.2% to -2.5%.As we discuss below, the position would arguably be still worse, save for the curious treatment of ‘imputed rent’ for houseowners, which – as a purely fictional or metaphysical element – nonetheless forms an

Till now, I have supported much of what Chancellor Rishi Sunak has put in place, as measures to help the economy through the pandemic.  The furlough scheme has proved its worth.
But today’s measures are inadequate and disappointing.  The new Job Support Scheme, under which the government will pay some 22% of the wages of employees who work at least one third of their usual hours.  This compares with the 60% of wages to be paid by the government in October, the last month of the furlough scheme.
According to the Financial Times, the monthly cost of the new scheme might by around £1 billion, compared to £4 billion per month for the furlough scheme (at October levels).  For the remaining 5 months of the year, that makes less than £5 billion, compared to the £20 billion likely cost if the

Till now, I have supported much of what Chancellor Rishi Sunak has put in place, as measures to help the economy through the pandemic.  The furlough scheme has proved its worth. But today’s measures are inadequate and disappointing.  The new Job Support Scheme, under which the government will pay some 22% of the wages of employees who work at least one third of their usual hours.  This compares with the 60% of wages to be paid by the government in October, the last month of the furlough scheme. According to the Financial Times, the monthly cost of the new scheme might by around £1 billion, compared to £4 billion per month for

The government wants us to return to our office workplaces in the cities.   The FT tells us:“The government will [this] week launch a media campaign to encourage more employees back to their workplaces amid growing concern in Downing Street over the rising number of job losses at service businesses in city centres that are reeling from a lack of customers. And from Sky News (Aug 20): “Just one in six workers have gone back to work in cities this summer after companies and staff ignored government pleas to return, leaving economic activity deeply depressed and placing thousands of small businesses at risk of collapse….[W]orker

The government wants us to return to our office workplaces in the cities.   The FT tells us:
“The government will [this] week launch a media campaign to encourage more employees back to their workplaces amid growing concern in Downing Street over the rising number of job losses at service businesses in city centres that are reeling from a lack of customers.
And from Sky News (Aug 20):
“Just one in six workers have gone back to work in cities this summer after companies and staff ignored government pleas to return, leaving economic activity deeply depressed and placing thousands of small businesses at risk of collapse….[W]orker footfall in Britain’s cities was just 17% of pre-lockdown levels in the first two weeks of August.”
The Centre for Cities’ “High Streets Recovery Tracker” shows

Source: ONS with our own estimation for 2020

The Wall Street Journal reported over the weekend (but not as a great surprise) that US GDP is likely to fall in the first Quarter –  before the main impact of the coronavirus hit – at the fastest rate since the global financial crisis: “This is just the beginning,” said Beth Ann Bovino, S&P Global’s chief U.S. economist, who estimates that GDP dropped at a 7.5% annual rate in the first quarter.  Also not surprisingly, the WSJ predicted far worse for April, and thus for Q2, and reminded of the extraordinary sudden rise in unemployment in the States: “By the end of March, over 10

Extract from Resolutions of Brussels International Financial Conference 1920

SummaryThe UK is experiencing, as a result of the COVID 19 crisis and response, its most severe economic downturn on record; the largest in the last century was in 1921, when annual GDP fell by 9.7%.  In assessing the likely level of the fall, the Office for Budget Responsibility (OBR)’s “reference scenario” seeks to take account of previous pandemic experience. The OBR and Resolution Foundation draw on a recent research paper (Barro, Weng & Ursúa) which claims that Spanish flu-generated economic declines for GDP and consumption amounted “in the typical

“The Bank has always held itself bound to the extent of its power to render the assistance required by the Treasury in any exigency and under any condition of the Money Market.” – James Currie, Governor of Bank of England, July 1885 to Lord Salisbury, Prime MinisterThe new agreement between Government and Bank of England to make the Government’s overdraft with the Bank (the Ways and Means Facility) open-ended has been characterised as direct “monetary financing” of government.  We don’t agree, at least for now. The Facility has however a long and valuable history of service, even if post-1998, with the “independence” of the Bank and establishment of the Debt Management Office, it has mainly been kept in hibernation.  It has stood at £370 million for most of the last

This post argues that the new Governor of the Bank of England is wrong to address the Bank’s role in the crisis through the prism of traditional ‘price stability targeting’. Rather, the Bank’s duty and task is to support the government’s economic (including fiscal) policies, and in particular – and in so doing – to act to protect the financial stability of the whole system. Actions to support the Bank’s monetary and financial stability objectives need to be integrated.On 5th April, the Financial Times published an article by the new Governor of the Bank of England, Andrew Bailey, entitled “Bank of England is not doing ‘monetary financing’”, and with the curious subtitle, “We will protect independence of inflation targeting”. Now, the first – monetary financing – is

“The Treasury must explain the reasons for any departure from the previous mandate and/or supplementary targets.“ From the current Charter for Budget Responsibility’s fiscal rules“The Treasury may from time to time modify the Charter… When the Charter is modified the Treasury must lay the modified Charter before Parliament.”From the 2011 Budget Responsibility and National Audit Act 2011—————-There’s no getting away from it – in the manner in which it has put forward today’s Budget, the government – and specifically the Treasury – have acted in breach of the law.  The government’s Budget Report is required to set out how it is meeting the present, legally prescribed fiscal rules and targets. It has ridden roughshod over this requirement, instead laying down rules that –

Image: latest version of Charter including fiscal rules, put before Parliament January 2017

Dirty secrets? Yesterday (5 March) the Financial Times published an article by its economics editor Chris Giles, under the title “The Treasury has two dirty secrets on its fiscal rules”. Underneath that, the sub-heading read “What is the use of gleaming new hospital equipment if there is no money to pay staff to operate it?”.Now this is all rather amazing, given the degree of deference generally shown to ‘fiscal rules, Though this debunking is no doubt timely for new Chancellor Rishi Sunak – as he prepares

Image with acknowledgment to https://www.flickr.com/photos/birminghammag/6798098618/in/photostream/

In his FT article yesterday (30 January), “The UK’s employment and productivity puzzle”, Martin Wolf says“The most important point is that the aggregate productivity performance of the UK economy since the financial crisis of 2007-08 has been its worst by far since 1860”. The key questions, however, are why this is so, and what to do about it. The ONS statistics do not take us back to the 1860s, but only to 1971.  We have calculated the average percentage quarterly change in labour productivity

At stake in December’s General Election in December is much more than just Brexit, though Brexit in the form proposed would be damaging enough.  It is a fundamental choice of the kind of society we want to develop.  In September, “Rethinking Britain: Policy Ideas for the Many”, was published, of which I was co-editor. The book brings together the creative ideas – across a wide range of economic and social policy fields – for a revived Britain based on the principles of a progressive, future-focused social democracy.  Some 40 authors have contributed.I was given the challenging task of writing the introduction and conclusion to the book.  Below,

Cabinet Secretary Mark Sedwill has in our view acted unlawfully in ‘advising’ or ‘ordering’ the Office for Budget Responsibility not to publish its report on technical changes in relation to its March 2019 fiscal and economic forecast, due out today.  By giving way, the OBR has helped to undermine its own independence. The only winner is the Conservative government, which wants to avoid scrutiny of its economic policies during the election.The OBR’s website tersely states:“Publication of our restated forecast will no longer go ahead today following advice from the Cabinet Secretary.As we notified the Treasury and Treasury Select Committee on 29

The Progressive Economy Forum today launched its new report, “The Great Brexit Wrench”, on the economic and political implications of Brexit. The report is by PRIME’s co-director Jeremy Smith, and looks at the background to and implications of Brexit from many different angles. It argues that there is no form of Brexit which will have a positive economic or political outcome. Brexit is however strongly backed by the pro-deregulation wing of British business – e.g. the business lobby organisation Open Europe — and the Conservative Party. Shadow Chancellor of the Exchequer John McDonnell described the report as “an excellent summary” of the

So the UK Supreme Court (a bench of 11 judges) has delivered its judgment. Unaninmously. The prorogation of Parliament, based on the unlawful advice of Prime Minister Johnson, even if in form an act of the Queen, was null and void and of no effect.A couple of weeks ago, I concluded my post on The Rogue Prorogation and the English-Scottish judicial divide with these words:Whether the (UK) Supreme Court will be willing to go quite as far in making inferences of fact so adverse to the government as those drawn by the [Scottish] Court of Session, I have some doubts, even though I am absolutely sure those inferences are valid in reality. But at the very least, the Supreme Court should affirm the potential of judicial intervention if the true intent of a government (as

As the pressures and contradictions of no-deal Brexit threaten the unity of the United Kingdom, further fissures are to be seen through the prisms of judical reasoning, in which English and Scottish judges view and interpet the world in utterly divergent ways.The English High Court (which included the Lord Chief Justice and the Master of the Rolls) has curtly dismissed the claim that the Prime Minister’s decision to seek prorogation of Parliament, for the five week period so shortly before the current Brexit deadline, was unlawful.  By contrast, the Scottish Court of Session (hearing the case on appeal) has held that the