Support 100 years of independent journalism.

  1. Business
  2. Economics
10 August 2018

The GDP figures confirm Britain’s economic weakness

The manufacturing sector is now in recession and the economy has grown below 0.5 per cent for six consecutive quarters. 

By George Eaton

On economic growth, the UK government is benefiting from low expectations. Friday’s estimate that GDP grew by 0.4 per cent in quarter two appears impressive when set against 0.2 per cent in Q1.

But the latest figure merely confirms that mediocrity is the new norm for Britain. The economy has now grown below 0.5 per cent for six consecutive quarters the longest stretch of anaemic growth since the eight quarters from January 2008 to December 2009.

The manufacturing sector, which Conservatives boasted would be aided by the fall in the pound, is now officially in recession (having contracted for two consecutive quarters, most recently by 0.9 per cent). And the trade deficit the difference between what the UK imports and exports – has widened from £4.7bn to £8.6bn.

As Grace Blakeley noted in her piece in this week’s NS, Britain’s goods exporters have been “ravaged by the preceding 40 years of currency inflation”. The country remains desperately over-dependent on consumer spending (British household finances are in their worst state since 1988) and the financial sector.

Philip Hammond has boasted that “the economy has grown every year since 2010”. But that any growth at all is now welcomed is a mark of the UK’s woes. Britain has endured its slowest economic recovery in history and average wages are not forecast to return to their pre-crash peak until 2025.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

And yet worse could be to come. The UK, it bears repeating, has not left the EU yet, but has already paid an economic price for the Brexit vote (becoming the slowest-growing major country). And, by historic standards, Britain is overdue another full-blown recession. With household debt at £25bn, the national debt at £1.8trn (85.8 per cent) and interest rates already at near-record lows (0.75 per cent), the UK will have precious little firepower to deploy when the next crisis hits.

Content from our partners
How automation can help telecoms companies unlock their growth potential
The pandemic has had a scarring effect on loneliness, but we can do better
Feel confident gifting tech to your children this Christmas