Ask six economists a question and you’ll get six different answers, goes the old joke. Well today I did and so did they. I was asking what the economists are expecting this morning's GDP figure to be (the measure of how the UK economy is performing).
On average they (and a wider survey conducted by Reuters) are forecasting growth of only 0.1 per cent. But they each pointed out it could be higher. Or lower.
The confusion arises from some contradictory signals from the official data published so far this year, which has been quite negative, compared with industry surveys, which have been a bit more optimistic. Also the ONS will be publishing a ‘flash estimate’, a best guess based on about 20 per cent of the data from March, so it may well be revised in a few weeks’ time.
So if we’re not to place too much emphasis on the flash estimate number it makes sense to look at the trend – and here a rather wan picture emerges. Look at this table from the ONS – and it’s the column on the right that’s important (marked ‘chained volume measure’ – simply the quarterly growth figure).
Going back six quarters you can see a pattern of small rises and falls which don’t add up to much – only 0.7 per cent growth last year, all told. That’s less than a third of what is considered to be normal growth in the UK.
As we’re talking about fractions of one percent, it won’t really make a huge difference to the overall trend whether it’s up or down. However, a negative number (showing the economy contracted in the first three months of the year) will make headlines because (as you can see in that table above) it will be the second quarter in a row of contraction – a definition of a recession.
If that’s the case, expect screaming headlines. Paradoxically, it may be those headlines which hammer the economy further by denting what little consumer and business confidence there is.
The one thing all my economist chums agree on is that we can expect mildly turbulent times ahead. Probably.