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Faster, higher, stronger? Olympics yes, economy no

By David Blanchflower

Published 14/08/2012

The Olympics deflected attention away from the recession
The Olympics deflected attention away from the recession

What a contrast between the upbeat and exciting news on the Olympics and the downbeat news on the economy.

Great Britain and Northern Ireland ranks third in the medal table. But that good news is tempered by the fact that, in terms of economic performance, the UK is doing disastrously in the economic medal rankings. If we just add up GDP growth in the last eight quarters for which we have data, the UK ranks 31st out of 34 OECD countries, below Ireland (29th) and Spain (30th).

The trade figures for June were pretty bad, with the trade deficit the largest since comparable records began in 1997.

Data releases from Germany last week showed declines in manufacturing orders, industrial output, imports and exports. Chinese exports in July rose just 1% from a year earlier, undershooting forecasts by a big margin.

Net trade is likely to continue to make a negative contribution to UK growth.

Nearly every sector of construction activity, from private to public and from housing to infrastructure, has shrunk considerably in the last year and overall, construction activity across the UK has contracted by 9.5% in a year.

Unsurprisingly there was all sorts of gloom and doom from the beleaguered Governor of the Bank of England at a press conference last week, where the MPC downgraded its growth forecast once again, to 0% for 2012 and around 1.7% in 2013.

"We got it wrong. Things are bad. And they're not getting much better anytime soon."

People running macro policy need be accountable; the buck stops at the top.

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