In great news for those looking towards economic growth in the UK, which is nearly everybody in the country, the Office for National Statistics has revised its figures for GDP change in the second quarter up from -0.5% to -0.4%. It still means there was a reduction in the UK’s output during this time, but it wasn’t as large a drop as previously thought.
The original estimate, given in July, was that the economy had shrunk by 0.7%. In August, this was changed to 0.5% and just today the figure became 0.4%. It means that this year will not be quite as bad economically as had been feared, though is still likely to see a dip overall. The chief UK economist from Capital Economics, Vicky Redwood, explains that “the economy should rebound in the third quarter as the bank holiday effect unwinds and any Olympics boost comes through. But we still expect the underlying performance of the economy to remain weak and GDP may even contract again in the fourth quarter.”
However, despite this upwards revision, some people are still not happy with the figures and believe that they are not giving an accurate picture of the financial situation within the UK. The chief economist for the British Chambers of Commerce, David Kern, has said that they “believe the new figures are still too gloomy. Three consecutive quarterly declines in GDP since the fourth quarter of 2011 are difficult to reconcile with rising employment and falls in the jobless rate.”
It’s a puzzle that has been troubling plenty of analysts as, despite the drops in GDP, more people are finding themselves in work and fewer people are relying on unemployment benefits. Borrowing and debt is also going down as people manage to pay it off. How we can reconcile this with an apparent drop is output is, as yet, an unanswered question.