Monday 26 October 2009

Does the ONS like being based in Newport, Wales?

I wonder if the Office of National Statistics (ONS) likes being based in the Welsh town of Newport and as part of its revenge the ONS releases deliberately gloomy figures for UK GDP? The recent ones wrongfooted the economic forecasters and apparently caused deep disappointment at Number 10. Italy now has a bigger economy than us while France and Germany are already out of recession. The ONS figures could be revised upwards at a later date but we seem to be in a state of limbo until the general election in 2010. If I was Gordon Brown, I would have gone for a poll during October. This might have minimised Labour losses and would have given the new government (a coalition one?) a six month start to begin repairing the public sector finances. Gordon might have even won a small
majority.

These public finances do not have to be repaired all in one go but if there was a judicious mixture of tax rises and spending cuts, then perhaps the budget deficit would not have to rise so sharply. Economic policy seems to be soley in the hands of Bank of England governor Mervyn King, who is going to have to reverse the policies of low interest rates and the consequent loss of purchasing value of the pound some time. We need these stimuli for now. The UK is starting to increase exports and is benefitting from a better balance in tourism spending.

UK Chancellor Alistair Darling seems to be showing a bit of independence from his Prime Minister but he will have his work cut out to go down in posterity as a successful occupant of Number 11.

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