GDP: Stormy weather

Headline GDP figures show a 0.2% fall in the last quarter of GDP. This is a provisional figure and is subject to change, but it is a disappointing figure none the less.

However, lets look closer at the numbers:

	Q4	YOY
Agriculture+Fisheries	0.1	11.5
Mining+Quarrying	-1.1	-13.2
Manufacturing	-0.9	0
Energy	-4.1	-8.3
Water	0.2	1.7
Construction	-0.5	1.3
Distribution+Hotels+Restaurants	-0.5	0.7
Transport+communications	-0.1	-0.1
Business Services+finance	0	2.1
Government+other services	0.4	2.5
GDP	-0.2	0.8

The year-on-year (YOY) figures give a better view of where we came from and the Q4 figures give us the most recent picture of where we are at now.

The high value YOY for agriculture reflects the very cold weather in the Q4 2010, although agriculture is only 0.7% of GDP so it does not affect the GDP number very much.

The big falls in mining+quarrying and energy are probably down to changes to commodity prices. There is not much that the government can do about that - it reflects the fact that global demand is contracting.

Labour blame the bankers for the state of the economy when financial services are actually growing faster than the rest of the economy. They would tax the banks and destroy any growth in financial services. That represents 29% of our GDP and would be a disaster.

Labour are blaming the return to negative growth (it won't be a recession unless there are two quarters of negative growth in a row) on the government. If you look at the numbers you can see that the biggest areas of slow down are due to the global economy/commodity prices.

Labour say the government are cutting 'too fast and too deep' but the figures show this to be completely wrong. The government part of GDP is actually growing (+0.4% Q4 and +2.5% YOY), so they have that part completely wrong.

The government part of the economy is not being cut, it is growing. That itself is not good for our long term economic health but it is good for the GDP numbers.

If we want to get back to real positive growth the only solution is to weather the storm and cut government so that the private sector can start growing again.