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UK GDP revision: the onshore economy never "double dipped"

Posted on Wednesday, February 27, 2013 at 11:24AM by Registered CommenterSimon Ward | CommentsPost a Comment

The quarterly change in GDP in the fourth quarter of 2012 was left unchanged at -0.3% but there were notable upward revisions to prior quarters, resulting in year-on-year growth of 0.3% versus an estimate of zero a month ago. Excluding oil and gas extraction, the economy expanded by 0.6% in the latest four quarters – much better than “flat-lining”.

The quarterly changes in non-oil GDP between the third quarter of 2011 and the third quarter of 2012 are now reported as follows: +0.6%, -0.2%, 0.0%, -0.3% and +1.0%. The 0.3% fall in the second quarter of last year was entirely due to an additional bank holiday so there was a genuine decline in only one quarter – the fourth quarter of 2011*.

The onshore economy, in other words, never “double dipped” in late 2011 / early 2012, in the conventionally-understood sense of recording successive quarterly contractions.

A further point is that the 0.1% fall in non-oil GDP in the fourth quarter of 2012 is attributable to an unwind of the Olympics boost. In the unlikely event of this year’s first quarter registering a decline, this will not qualify as another “dip” (second not third) – a second-quarter fall will also be required.

Will the triple-dippers please acknowledge their mistake, or else make clear that their phantom recessions reflect weak North Sea production, bank holidays and the impossibility of hosting the Olympics every quarter?

*This contraction was caused by a squeeze on real incomes and spending from consumer price inflation spiking to 5.2% in September 2011.

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