GDP figures mean Britain will miss its economic growth targets (Tories' Austerity Experiment Fails)

[Turborama]

Source: The Guardian

Julia Kollewe | Tuesday July 26 2011 12.38 BST

A slowdown in Britain's growth in the second quarter means that the economy is weaker than thought and has no chance of meeting its official growth target this year.

The eagerly awaited preliminary GDP estimate for April to June showed the economy growing by 0.2%, rather than contracting. Although this was better than some of the gloomier forecasts, it is still slower than the 0.5% growth seen in the first quarter, which came after a 0.5% decline in the fourth quarter of last year. City economists and thinktanks warned that the Office for Budget Responsibility would have to revise down its 1.7% growth forecast for this year.

Will Straw, associate director of Institute for Public Policy Research (IPPR), estimates the UK will grow by just 1.2% this year.

The weak growth is fuelling fears that Britain could lose its AAA credit rating unless the economy picks up sharply in the third quarter.

Read more: http://www.guardian.co.uk/business/2011/jul/26/gdp-figures-economic-growth-targets

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Read on for the response from the general secretary of Unite, Britain's largest union, at the end.

Looks like the results of Cameron and Osborne's (not so) great austerity frenzy experiment are coming in, lots of pain and hardly any gain.

[MidwestTransplant]

1. It's called austerity

[OHdem10]

2. That Austeriy is really working out well for them, huh. Sarcasm

[on point]

3. Another data point that says Supply side economics is a fraud

[DavidDvorkin]

4. The answer is more austerity

Some Tory is bound to say that.

[bhikkhu]

5. 1.2% isn't bad at all

...generally speaking. Economists are prone to liking 3% growth or more, which is more on the insane bubble-blowing side of things. So I'm prone to thinking that this says nothing one way or another about "austerity measures", but rather the modest growth which is possible when energy inputs are under heavy constraint.

When energy is abundant and cheap, any hare-brained economic ideology can produce growth - it really doesn't matter. Look at the consistent growth of a wide variety of systems in the 20th century for examples. On the other hand, when energy is becoming scarce and expensive, any values other than responsible use lead to long-term declines. At some point, sustaining what one has (zero growth) should become a measure of success - we cannot keep growing for long on a planet that remains finite.

[bossy22]

6. 1.2% isnt good though

especially when your historic average is 3%

remember, the U.S. itself needs 3% just to deal with the growth in the work force. if we grew indefinatley at 1.2% we would have consistent high unemployment

[bhikkhu]

7. 3% is absolutely unsustainable, even in the short term

One way of thinking about it is to consider our current economy - both activity and infrastructure - as a baseline, then think about growth in terms of how long it would take for everything to double. Keep in mind how many hundreds or thousands of years it took for things to be built-up and paved over and populated and systematized as they are.

At 1% growth (compounding), everything doubles in 72 years. Imagine a child born into a world fully utilizing its resources, but with a similar-sized spare planet handy to fuel further growth. If growth is at 1%, during that child's natural lifetime the spare planet will be full and fully utilized; "the wall" will be reached in one lifetime.

If growth is 3%, the spare planet will be fully utilized in 24 years or so. Then, to keep things going at "historic averages", 2 more planets of similar size would be needed. Assuming there are two more planets handy, both of these will be filled up and done in about 24 more years. At which point the individual in the example will be 48, and would be likely to say "we still need 3% growth to deal with growth in the workforce - find more planets!". Assuming four more planets are conveniently at hand, then happily growth continues for another 24 years, when all 8 planets are full and more planets are needed again. And so on...

Needless to say, we don't have any other planets, and growth has put us up against the limits of many resources currently. Even if one doesn't consider the effects of our energy habits on the atmosphere and climate, and the large-scale extinctions of the other species we share the planet with, as a species our poverty may be growing faster than our wealth.



This is an interesting article on exponential growth - up to how long current rates of growth would take to require the energy of the entire galaxy to sustain (its not all that long!):

http://www.theoildrum.com/node/8155