The Week in Review – good news on borrowing – no new news on growth
Friday and it is the second estimate of GDP for the fourth quarter of 2011. No revision to the overall fall quarter on quarter of 0.2% and the annual change compared to Q4 2010 is up by just 0.5%. Service sector growth is up by 2.2% but manufacturing output falls. So much for re balancing the economy. Download The Saturday Economist 25th February 2012.
Gross mortgage lending
Gross mortgage lending was 10% higher in January, an estimated £10.5 billion compared to January 2011, according to the Council of Mortgage Lenders. Levels of lending in 2011 were down by 60% compared to the heights of 2007.
Minutes of the MPC January meeting were released this week. No surprise to find Adam Posen wanted a larger dose of QE, any more than it would be to find a kleptomaniac on a shoplifting charge. Adam Posen is an intellectual bulldozer on the topic. Some surprise to see David Miles in the QE max camp however. No one on the panel wanted to see a rise in base rates.
Government borrowing falls in January – was the headline down -£7.75 billion compared to -£5.2 billion in January 2011. For the year as a whole borrowing was £93.5 billion compared to £109.1 billion over the same period last year.
As a result our borrowing forecast for the financial year is £119.0 billion, a reduction of £18 billion on prior year and slightly below the OBR forecasts. However the easy gain from the VAT rise last year will make more significant reductions in the year ahead much more difficult and the debt service burden keeps on rising.
Business investment in seasonally adjusted terms fell by £1.7 billion to £28.7 billion (-5.6 per cent) when compared with the previous quarter and decreased by £0.6 billion (-2.0 per cent) when compared with the fourth quarter of 2010.
Outlook for the medium term (four to five years)- weak growth is the new norm according to Andrew Sentance speaking at an Institute of Economic Affairs event this week. Cheery stuff!
That’s all for this week, more news from the Saturday Economist next week.
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