Flat quarterly growth (i.e. 0.0 per cent) in 2019Q4 continues the volatile but overall weak figures throughout the year: Q1= 0.6%; Q2 =-0.1%; Q3=0.5%. Overall growth for the calendar year was 1.4 per cent, second weakest of the past decade. Within this, the manufacturing industry is in recession - a calendar year decline of 1.5% is the worst since the global recession.
This year’s growth was a dismal end to a dismal decade. Looking simply at calendar decades, over the 2010s growth averaged 1.9 per cent. This was just above the 2000s, and lower than each other decade since the war.
But decade statistics are to some extent arbitrary, depending on the timing of recessions. Performance is better judged over recovery cycles, measured from the low point of recessions.
So the present recovery begins at the trough of the ‘great recession’ in 2009 and extends a decade to the end of 2019.
The chart below shows this episode worse than all other recoveries over the past century. The only comparable recovery was the 1920s.
Even over a decade some recovery episodes begin to overlap with others – so for example 1975 to 1985 overlaps with 1981 to 1991, depending on the frequency of recessions.
Looking at even older data the problems become more acute, with GDP data increasingly volatile. Nonetheless some judgment allows comparable figures to be devised.
On this basis the present recovery is the worst since an episode over 1808 – 1818 – which overlaps with the Napoleonic wars.
Leaving the latter figures aside, the only meaningful comparison is with the 1920s. Strikingly this is the decade that fostered modern macroeconomic thinking in the 1930s.
Over the 1920s wrongheaded monetary and fiscal policies operating in tandem meant great hardship, with the decade ending in the Great Depression – the most severe economic crisis of all time.
It is as if over the past decade ignorance has been re-invented. While renewed recession has at least been avoided for the moment, the economy has gone nowhere.
A cynic might find it unsurprising that the Prime Minister has chosen to confirm HS2 today.
Looking at the detail in the 2019 figures also shows that outcomes would be significantly worse if not for a recent uptick in government current and investment expenditure.
But a lot more needs to be done. Fundamentally, these figures demonstrate policy failures over the whole of the last decade.
Why has this has been allowed to happen?
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