The release of the growth figures by the Official for National Statistics is a bit like peeling an onion. UK number crunchers have three goes at estimating the quarterly performance of the economy and a little more is revealed each time.
In October, the ONS released its flash estimate of GDP for the third quarter based on the output of sectors such as manufacturing, construction and services. This showed the economy had expanded by 0.7% between the second and third quarters.
More data has rolled in over the past month. The ONS still believes the economy grew by 0.7% in the third quarter – slightly down on the second quarter but still robust – and can now provide more detail about the balance of growth.
That’s because the second estimate of GDP supplements the output measure of growth with an expenditure measure of growth. So we find out how much of the growth was due to consumer spending, how much was due to government spending, the contribution of investment, whether firms are building up or running down their stocks, and what is happening to trade.
The message from the expenditure components of growth is that the rebalancing of the economy is still some way off. The domestic economy expanded by 0.9%, with trade knocking 0.2 points off the quarterly growth rate. Consumer spending rose by 0.8% in the third quarter, while government expenditure was up by 1.1%. Business investment fell by 0.7%.
Ministers can point to the weakness of the eurozone to explain away the poor export performance. This, though, is a feeble excuse given the weakness of exports – despite the boost from a substantial depreciation of sterling – throughout this parliament.
So, yes, the economy is growing. And, yes, it is growing faster than that of Germany or France. But it is the same old economy, with the same old weaknesses.
