Today the UK's Office for National Statistics (ONS) has published figures showing that the country's economy is doing worse now than when the coalition government came to power in 2010, and that we are in the worst recession since records began over 50 years ago. The UK output shrank by 0.7 per cent between the beginning of April and the end of June. This was much worse than expected.
But some economists dispute the accuracy of these preliminary figures, because they are mostly estimates. There are also, as well as an increase in number of jobs, other figures that go against the ONS numbers: in the North-West of England, for example, exports are up by 8 per cent.
The British Chamber of Commerce's John Longworth says that their and other business surveys and the employment figures all belie what the ONS is saying about the GDP.
Jonathan Davis, economist and wealth manager, claims that governments, both in Britain and abroad, have made the wrong choice: we have had an interest rate too low for too long. Heightening interest rates in the UK and stopping bailing out banks would have a short-term detrimental effect for the economy, causing a lot of pain for a couple of years, he says, but after that, long term, Britain would have much lower living and manufacturing costs and it would be the most attractive nation on earth into which to invest. It would be a short sharp shock to the system, followed by 20 years of growth.
Chris Williamson, chief economist at financial information company Markit, constantly carrying out surveys and talking to businesses, said today on Radio 5 Live:
"Certainly we are much more in line with what the labour market figures are saying. We speak to thousands of companies every month across the broad spectrum of the economy. We also talk to recruitment agencies, we run a monthly survey of those, we talk to marketing people about what their views are for their business. And all of these surveys have painted a reasonable picture of the economy in the first half of the year, and very much in line with what we are seeing in terms of private sector job creation.Williamson adds that these GDP numbers do come with a big health warning, even the ONS that compiles them laces their release with warnings about them. The ONS is under huge pressure to come up with early estimates from the Bank of England and the government who want some insight into what's going on: this release, for instance, contains no information about what happened in June, which is only made up of estimates. It's a very incomplete picture they've got.
"Employment is not just rising, it's actually surging. In the 3 months to April we saw one of the largest increases in private sector jobs that we've ever seen. The services actually saw a record, even manufacturing added 38,000 jobs, which doesn't sound a lot but this was the largest increase since the late 1995. And these are not all jobs in London for the Olympics, they are not all part-time jobs. There's a really robust picture out there. We don't think that the country is in recession."
Asked if he thinks that the Bank of England might react by cutting rates, he replies that it might do but what's becoming increasingly apparent is that central banks have very limited scope to boost the economy.
The fundamental problem is low confidence, to which headlines on double-dip recession contribute. Measures boosting a supply of credit are very good but what we really need alongside them is an increase in the demand for credit. Shadow Chancellor Ed Balls' proposed solution of cutting VAT is not going to help either, he thinks, because, rather than boosting spending, we need a much more fundamental growth strategy, so that businesses will see there is scope for them to see increased demand for their goods and services and they'll invest in jobs and machinery.