UK ECONOMIC SLUMP: A recession of olympic proportions


1-2-3, GDP, tell me please, what is Plan B?

Although the full ONS data aren’t live until 9.30 am BST today, there has as usual been Much-Leaking-in-the-Cabinet. Allegedly the numbers will show a 0.2% negative for GDP in Q2 2012. That follows 0.3% in Q1, and 0.4% in 2011 Q4. Do three Qs of negatives make a QE3? Not as far as the MPC’s vote last week is concerned, but then nobody has the answer to that equation.

09.35 BS update – the decline is a whopping 0.7%!

What we can observe, however, is this:

1. The MSM still insists on calling it a double-dip recession. It isn’t, because the ‘recovery’ from the first bit was manipulated with our money to make it look like that. There is no difference in my head between gold capping, Libor fixing, Zirp and QE: they are all forced, unnatural State attempts to hide the fact that our output base is too small, our economy lopsided, and our island ridiculously overcrowded.

2. Zirp and QE have helped the banks and the large multinationals (and kept the FTSE artificially high) but done nothing at all for the broader economy.

3. The Olympics trumpeted far and wide as a much-needed boost to Britain’s economy has so far been not only a growing debt we can ill-afford, but also a short-term disaster for economic activity in the capital. The day after we won it in 2005 I said this was a cast-iron certainty, so I’m now feeling suitably vindicated. But it’s hard to feel smug: while there is still hope that the economy will be boosted by the Games in Q3, it will not recoup the cost. Already, Government departments are back-tracking on the ‘benefits’ using careful phraseology such as “a limited overall boost from the staging of London 2012.”

And after the Olympics, what happens then? My bet is firmly on a slight upswing in Q3, and then an appalling Q4. How appalling it is depends on the size of the Euroblown backwash, and how quickly the banking contagion spreads around the world. But no spin and no talk about double-dips and ‘overly pessimistic numbers’ can disguise one simple fact: 75% of the UK economy is service-based, and a huge proportion of that crazy figure is financial services.

I’ll wager now that financial services as a sector has had an awful Q2 – but that Q4 will be close to a meltdown. And in a global recession, service industries are the first to contract.

What lies before us once the Olympic distraction has disappeared is a mind-concentrating slump of olympic proportions. And anyone who thinks otherwise either hasn’t done the maths, or never reads about events in the eruozone.

The depth of the slump was always going to be bad, but it has been exacerbated by idiotic fiscal and stimulus policies flooding big business with money, starving UK growth industries of working capital, and reducing the consumer’s ability to spend our way out of it to at least a limited degree.

There is no getting away from that, and under Labour it would’ve been just as bad. The UK needs fresh thinking in every sphere of life: but most of all, it needs to reform banking, dump the costly civil service, and break the  stranglehold on power of politicians who – when they occasionally do know what they’re doing – work for themselves and their donors, not for us.

86 thoughts on “UK ECONOMIC SLUMP: A recession of olympic proportions

  1. So, can anyone please tell me when the markets will start to put two and two together?

    When the markets do wake up, and the stock market falls gently, interest rates slowly climb … is it then “Game Over” for Britain as it is led, head down, to join the ranks of the needy?


  2. Perhaps the markets prefer the answer given as four rather than quatre or vier Gemma, maybe it looks less ugly that way?

    At least we can while away the time by pointing at each other as Le Manche welcomes us into its open arms gurgling nil points for positivism.

    Perhaps its an age thing?

    After toiling away for a few decades the fruitlessness of it all becomes too much requiring youth and vitality to invigorate with fresh blood .

    Hollande could be on to something afterall with his slashing in the face adversity.


  3. Your review of the UK economy is rosier than Prof Steve Keen’s. He’s predicted a major crunch for the UK this year. Me thinks he wasn’t far off the money with RBS recently.


  4. Monk
    if they are English speaking, then the answer to your question is indubitably “yes” – for few British can speak anything but their native tongue. If the answer was “vier” or “quatre” the English would simply look at them bemused and ask “nog twee bier, please” – to which the answer would be “which kind would you prefer, sir?”.

    That is the problem with the markets: the people using them do not have sufficient knowledge.

    As to “youth and vitality” look ye not to the British education system – somewhere between 20 and 30 on the European scale.


  5. The UK recession has deepened, latest official figures show, after the output of the economy fell by 0.7% between April and June.

    It was all that rain of course.


  6. @ savepenrhos and Cornish

    Off topic in this thread, but following up on a previous one: ‘SYRIA: FT now only 5 days behind The Slog’ where your comments were made.

    savepenrhos made the unsubstantiated comment that ” Countries such as ours, Norway etc etc have a far lower incidence of gun crime than USA, Switzerland etc. The overwhelming experience globally is that countries with strict gun controls invariably have lower gin related crime.”

    I responded asking for proof since Switzerland in particular has one of the highest personal gun ownership rates in the world.

    You, Cornish, responded by providing a link to a ” detailed global homicide report linked on this page” which – actually – totally demolishes your own argument. [In passing I do sometimes worry that those with a specific agenda never actually bother to read such reports in full but simply scan the summary to their own satisfaction.]

    Contained within this report, linked by you, is the unequivocal statement:

    “For example, a transnational macro-area with low levels of homicides consisting of the centre and south of Germany, most of Switzerland, western Austria and the centre and north of Italy emerges.”

    So, case dismissed.

    Gun crimes and homicide rates are linked to poverty and the – so called – war on drugs. Full stop. In the States, the possession of defensive guns has been shown to reduce homicide rates. Most of all, it continues to restrict total government control.


  7. I think you’d be surprised at the fluency foreign languages are spoken on these shores, perhaps you’re letting your animosity towards all things British cloud your thinking?

    Just as very few Germans going about their daily lives today were responsible for war crimes committed 7 decades ago, there are only a handful of British people alive today that would have been around during the Boer War and then only as toddlers, if it is that what darkens your thoughts?


  8. You can tell things ar really getting desperate by the small things which are occurring (FSA saying free banking should end, moralising about cash in hand payments, etc)

    They think people are stupid (and with our dumbed down education system they may have a point) and can be hood winked but we can see daily that trouble is brewing


  9. The whole of Europe, including UK is in for one hell of a winter….and thats assuming that the Gulf Stream is reasonably benign……..

    After todays UK Q2 figures….and in case by Q4, things turn really nasty……may I recommend the following ..or whatever precations you Sloggers are able to take…depending where you live…but heres my list from deepest Surrey…

    Coal…Buy at summer prices NOW

    Full Logshed……….Check …nice and dry and seasoned

    Full Logshed 2……25% done ..Rest still to do

    5 full calour gas cylinders….Check

    5 Oil Lamps and oil…..Got 3 must buy 2 more

    Lentels and Rice…Check but need to make a bigger dry store (secure from mice and rats)

    Bottled water…Check but buy another 48 2L bottles more….

    Tinned meats and fish….not yet but buy very soon

    Increase Neighbourhood Watch activities with folks in my street…

    Make plans to help our very local elderly and infirm…..

    Someone please tell me that I’m wrong …..:((


  10. I keep saying it, and I’ll say it again now.

    The mainstream ideas are that the crash of 2007/8 was the result of an obstacle on the line, and that the problems we have been having since are the result entirely of not doing the right things to clear that obstacle.

    These ideas are incorrect.

    The crash of 2007/8 was the culmination of years of faulty policies which reached their breaking point – a prospect widely predicted by competent reality-thinkers, but brushed off as incompetent alarmism by the dream merchants who have been elected to run our national affairs.

    The problems we have been having since have been caused by the fact that we are focusing on trying to clear an obstacle, rather than doing what’s necessary, which is to recognise the faults in the policies through to 2007, and to reverse and correct the consequences of them. The 2007 derailment was not caused by an obstacle, but by a badly constructed track.


  11. @GrahamD. Wise precautions at any time. The Great Storm of 1987 had our village cut off for three days. The prep you suggest would have been very handy. You’ve given me food for thought.


  12. If you’d actually bothered to keep up – which you obviously didn’t, then you would have seen figures appearing later and not only on the original but also on a seperate thread ( ) from a link in one of John’s other posts.

    The plain fact that you failed to notice something as big as all that speaks volumes.

    The fact of the matter is that you are more likely to be shot in the USA than in Norway or the UK. And more likely to be robbed at gunpoint.


  13. Sorry to go against the trend but a lot of economists are wondering why the ONS figures keep getting worse when so many new jobs have been created over the past 3 quarters and lead times are starting to extend for many materials. Why the disconnect?
    I know lots of companies in the North-West that are booming; recruiting and working overtime . Of course the South East continues to do well.. Is it just Scotland dragging us down despite the aircraft carriers?


  14. Day 3 of the 6 week bear market,and the official GDP figures are the usual nonsense( they will be revised upwards in 9 months time).The sun is shining,the pool is a pleasant 79,Greece and Spain are still headed for the knacker’s yard in early September,and now we learn that Volvo’s truck sales are deteriorating in FRANCE.the UK still has one or two gems in engineering, so keep an eye on my old favourites,C ti s and best of all R n ha .


  15. I reckon JW is about right – although when one considers the facts: 
    22 working days x 3 = 66 days. 
    One extra bank holiday is therfore 1.5% of output for most of our sectors.
     Perhaps a loss of .7% is not so bad! 


  16. Got a good Honda one…yup thanks JH …lets add that to the list…along with a little petrol safely stored in the shed at the end of the garden ……before I risk sounding like a Conservative minister !


  17. Ok …we have to wait for this corrupt financial system to completely fail…BRICS countries already trading outside of the system, BRAZIL/RUSSIA/INDIA/CHINA/SOUTH AFRICA…not dealing in the $..there is a system ready to install, but cannot install until the corrup are all removed, bankers are resigning for months now, and arrest happening, but mainstream won’t report, until the Cabal are gone, coming to your cinema sometime we hope this year:) not conspiracy theory.


  18. @savepenrhos

    kfc1404 said the root cause was poverty and the so-called war on drugs.

    You appear to agree with him. Who is likely to be robbing you in the USA? A drug-addled waster who is in poverty because he has spent his entire income (and everyone else’s that he can steal) on drugs.

    Try a better argument, please.


  19. Oh gosh, wasn’t it the first thing that came to mind! How a minister can rail against paying the milkman in cash (which may be declared as income anyway), when the ministers’ buddies have their heads stuffed much further in the trough, sounds to me like the scraping of barrels.

    …and your point about the appalling education system is also taken.


  20. Excellent idea, but make sure you rotate the petrol occasionally, it lacquerises after a few months. Needs to be put in your car and the jerry-can refilled with fresh.


  21. Organstan, I’ve noticed this too (in the east mids)

    As an SME we have significantly increased staffing levels over last 6 months, to match a significant increase in order intake. Word of mouth from a large number of clients and personal circle of friends are seeing the same thing.

    One thing we have noticed is that customers obtaining business financing (esp. leasing has become very difficult).

    The GDP figures, as John’s piece suggests, are probably massively skewed here in the UK by the gargantuan finance sector.

    Is this some sort of decoupling of the “real economy” from the quasi-economy of derivatives of derivatives, and consumer led iTat?


  22. It’s the chicken and egg situation old nis. Would the drug-addled waster actually have access to a gun to rob you at gunpoint if they were not so widely available?

    Which I think is the point savepenhros is making.

    It’s a moot point as far as I’m concerned in that never having lived in the US, I’m ill equipped to make a judgement regardless of how many statistics I choose to refer to.

    Although the reassuring bulge of the worlds most powerful handgun must provide a certain comfort……………..

    When faced with a robber armed or otherwise.


  23. @savepenrhos
    There are more gun-related offences in the USA than in most places. Conceded. Partly cultural I suspect (cf Switzerland with higher per capita gun ownership but fewer offences), but due mostly to income disparity and poverty. More and more, however, the data points to the fact that in States with strict gun carrying laws in the USA have a much higher incidence of gun-related offences than those without since the criminals know that they can get away with it uncontested.


  24. But was not the Jubilee supposed to be a positive for the UK’s business’.

    As an aside first day of Olympic lanes in west London (Battersea, S.Ken) it is like a ghost town especially in Battersea.

    Londoners are presumably embracing the Olympics by leaving town and/or tourists are not coming to ripoff London hotels/rentals/b & bs


  25. Don’t forget the gun!

    You’ll need it when the other 99.99% find out you’re now deemed to be holding out on them.

    Survival sucks!


  26. Whereas I work in a part of the service sector for a very large company in a product that is extremely sensitive to consumer activity and both ourselves and our two main competitors are well down and still falling despite lowering prices to below where they were 2 years ago. Future sales are abysmal.


  27. Except that the vast bulk of the private sector and a substantial part of the public sector never got the day off. They have been given a day in lieue to be taken elsewhere in the year. In addition, there should have been slightly increased consumer activity with all the plastic memorabilia..


  28. @JW: You’ve made the mistake of believing anything said by the Treasury & Merv King.

    QE3 was already announced several weeks ago. This time round they called it the “funding for lending” programme – ie: more printed money going to the banks at ultra-low interest rates. From close analysis it is another round of QE. Merv claims it is to increase lending to commerce but he said exactly the same thing about QE1 & QE2 where the overwhelming amount went into buying up govt debt.


  29. What “markets” are you talking about ?.
    That free market of ancient lore.Considering that we all
    now know that everything is “fixed” a la LI(E)BOR,I
    wonder what the real figure are.
    All I have to do here is talk to my clients and suppliers
    here in the US, and everyone knows the Govt. figures are lies.
    Why would it be different there ?


  30. @Erika

    Its probably a first – but we are (I think) actually in agreement (credit where credit’s due)………… now if only you would see facts square on regarding the ‘Zionist’ kill the Islamists propaganda……….. the same sort of propaganda which seeks to disarm the people from a tyrannical state through very cleverly disguised misdirection.


  31. As a meaningful measurement GDP is useless while it continues to include government spending:

    1) If a government cuts spending then this will lower the GDP.

    2) It is highly debatable whether government spending counts as ‘product’.


  32. over the last 10 yrs from the bottom up people have had to use there savings if any to survive,the hope is that even the mega rich borrow & soon they will have to unearth their vast wealth to pay for it
    Just far to late to stop the gravy train


  33. @Capt Yossarian: Agreed. If people bothered to study the elements of the GDP measurement they’d laugh their head off. It’s a govt fantasy and bears little relationship to what happens in the real economy. The only good thing to say about it is that it’s reasonably consistent.


  34. Beg to differ but we are in year 12 of a secular bear market.
    It takes on average 10 years after the mal investments are
    liquidated to recover.A process not yet started.This may be the
    start of the 2nd leg down,usually worse than the first.
    The2nd leg will be much worse this time because of that
    mal investment.However I think there is no comparatve data
    for what is soon coming to us all..


  35. Morningstar,
    Might I plead the opposite. Now that you have acknowledged the power of rational argument and a dispassionate consideration of the facts in one sphere, might you now consider the same approach to something to which you (and JW) are more irrationally attached?


  36. I remember years ago being advised to invest in (a) the funeral business (a sure-fire growth industry), (b) land (God isn’t making any more land, but the demand for land is always growing) and (c) canned protein like sardines and corned beef (for the Armageddon that was coming any day). This was in the days of the Cold War.


  37. Just wait for the next stage of the UK saga, the onset of significant inflation deliberately unleashed as the least unsatisfactory option. You will lose your financial shirt, your pension, your savings… Ask Ed Balls, he’s certainly working on it now.


  38. Trust in the Lord and make up your own mind that whatever happens you will not be driven to do wrong to your fellow man. The Lord fed the 5000, and he can look after all of us and help us to help ourselves, if we want him to. I found that out diring my ordeal in those horrible courts of corruption!


  39. fear not john, nit romney is promising to regenerate the special ‘anglo-saxon’ relationship whereby anglo-saxons on one shore of the atlantic can psychosomatically transmit societal, political and financial diseases to anglo-saxons three-thousand miles away on the opposite shore of the ocean – it’s apparently some deep mystic number which originates way back in the mists of european pre-history, a bit like the aboriginal dreamtime, i believe, but not quite so spiritually therapeutic.


  40. @ Gemma

    Clearly, you know nothing about markets. That is obvious. In fact I wonder why you like to display your breathtaking lack of experience and knowledge on this website.
    Are you not running a little late for the job, or is there no job??????


  41. john,

    perhaps you might add to your list of british woes the expensive distraction of obsessive islamophobia, which causes our country to spend untold wonga on immoral theiving wars and dilutes concentration on the true domestic nature of our economic problems.

    being a category-a offender in respect of the above-mentioned thought-crime, i suggest, by way of rehabilitation, you attend a performance by funmi olawumi and the naija soul sisters – aside from a stirring tribute to her late father, the artist includes in her vibrant set of faaji music a song which examines the tragic wave of inter-faith hatred and violence currently afflicting nigeria’s (muslim and christian) communities and leaving hundreds of worshippers dead.

    funmi oluwami is also director of the renowned yoruba women’s choir.


  42. Totally off subject.
    Had to use one of my guns this morning.
    Found a copperhead in the garden,and it refused to decamp.
    Much safer than using an axe or shovel.
    Makes for a change,but I prefer the taste of rattlesnake.


  43. …oh…and john, if you are really serious about advancing and enhancing your spiritual development, you might like to purchase funmi olawumi’s latest cd, entitled funmi ti de (only £12).


  44. Sir,

    ”….When the markets do wake up, and the stock market falls gently, interest rates slowly climb … is it then “Game Over” for Britain as it is led, head down, to join the ranks of the needy?….”

    So sorry, I made a mistake – even I can’t understand what I meant here.
    A bit too early in the morning for me. I should have stayed tucked up in my bed with my new teletubby duvet set.


  45. I am sure the Queen(mine also) has a more than large number
    of snakes to deal with.Two legged,but snakes none the less.
    I prefer the reptilian version, what you see is what you get..
    Anyway, got to go and dress my supper.Might get 1/2 lb of meat
    of it.Who knows .maybe it has some friends in the garden.


  46. I haven’t read the press release, but expect that a major factor is a sharp fall in construction activity.


  47. Wouldn’t it make sense to have a look at the press release first, even just a cursory glance before making a comment?

    Or is it ‘Sage’ status your seeking?

    Alas that goes honour goes to Captain Yossarian for correctly identifying HMG as the culprit for making cuts (without cuts) that actually cut GDP


  48. @ Winston

    If you don’t find any in the garden I suspect the House Of Commons will offer up about 650, plus or minus one or two of course.


  49. I’m not sure what you are alluding to @jane but the BRICs and SA are the MOST CORRUPT countries on the face of the planet. Probably if we found other planets in the universe, we would not find such a corrupt place as the BRICs.


  50. Pingback: John Ward – UK Economic Slump : A Recession Of Olympic Proportions – 25 July 2012 | Lucas 2012 Infos

  51. I don’t know if this reply will go in the right place but anyway. Why do people seem to think that Europe and the U.S.A should have the same gun laws? Why do people presume that the statistics matter between the two continents? We are not starting from the same place. If I lived in a U.S. city I would have a gun. And if any one tried to remove that right I would resist it. I live in the U.K. I don’t need a gun, don’t want one and don’t see any reason for us to change our laws. Why is it so hard to understand that different places, people and situations with different history’s need different solutions?
    If you banned guns in the U.S. the country would still be awash with guns, the only people who would be unarmed would be those foolish enough to follow the law. That is not the case In England.


  52. Dried Pasta, Flour, Dried Yeast Sachets. Dried Pulses (Chickpeas White/Brown, Red Kidney Beans, Blackeyed Beans) all make lovely dhals & last ages. I’ve been doing this a long time now, keeping what my gran used to call ‘red cross parcel’ food in storage. I must admit all this talk frightens me & I must say that when the mob’s come pilfering (every man for himself) I’d stand no chance anyway. No guns here. Spud gun anyone? :)


  53. Of course we will and if its not this particular ‘war’ it will be the next one looming over the horizon. It’s all part of TPTB gameplan. Nothing like a war to sort out the economy, more money for the fat cats. I’ve been saying for a while now that ‘they’ will instigate compulsary conscription soon, its just a matter of time. A massively cut army and mass unemployment, oh yes the bastards will make work alright for our sons and daughters. (Over my dead body will I let my son go).


  54. @GD Yeah but how are you going to cook all those lentils without using your precious stores of energy needed for heating? They take a while to cook you know….and a lot of water……

    I’m still trying to get my head round that one, especially as I cannot use logs …perhaps I’ll qualify as one of your old and infirm…..


  55. Pingback: EUROBLOWN: Inflationary, stationary and vacationary. | A diary of deception and distortion

  56. @alteregoman

    plenty of young tourists today in London, but agreed, the usual working pop are scarce- didnt even have to stand on the tube this morning


  57. A mere ornament Omkara, if devoid of spud.

    Fear not the fearmongers, for they know not what they fear. Fear is the real enemy if it paralyses your ability to think.

    Opposable thumbs has its advantages, if only to get a grip.


  58. don’t the americans get that many britons would kindly prefer them to eff-off and fight their own wars?


  59. Quit calling it a Recession.


    It’s part of the Ministry of Propaganda’s media massage to re-brand it a ‘recession’.

    Poppy Cock


  60. The trouble with markets is people using them don’t have enough knowledge??? What utter f***ing tripe.

    A market is a price discovery mechanism, nothing more, nothing less, and it can stay irrational a lot longer than a moron can stay solvent by saying it is “wrong”.


  61. Pingback: John Ward – Euroblown : Inflationary, Stationary And Vacationary – 26 July 2012 | Lucas 2012 Infos

  62. How can interest rates climb when the BofE [1] sets lending rates [2] sets bond price floors by printing as much money as it needs to buy any bonds?

    Bear in mind that the pound sterling is the oldest currency still in use since Britain has never defaulted on its debts. Consequently it is no surprise that it is the 4th most traded currency in the world.


  63. Sebastian

    A market is a price discovery mechanism, nothing more, nothing less

    Do you know John Ward’s “The Slog” by any chance? You can find it here:

    It would put you straight in your beliefs that markets are what you say they are. It seems that they are rigged from top to toe. I have strong doubts as to the ability of the market to do anything save make money.


  64. Rupert

    Do you know something? I learn a great deal here at The Slog. It is a great shame that the few I do learn things from do not include you in their numbers.

    As to my knowing nothing about the markets, given that I have a good understanding of European psychology, you may find yourself being surprised at what I do know. Oh, and I can do the partial differential equations too.


  65. JS

    yes, you are correct, but printing money in the way that the UK is and has, has its own inherent dangers. The real thrust of my argument was that if Britain did borrow on the open market it would take interest rates higher and the likes of JW and many other people in the UK would suddenly find that their long saved for pension meant that they had a little more spending money.


  66. If we were totally self sufficient JS we could print with impunity, it starts to fall over once the £1 in your pocket is of no interest to foreign pockets.

    I recall vividly quaffing beer in Munich back when Dennis Healey had his moment, German bar keepers uneasily exchanging my sterling for their amber nectar, trying to calculate how much my hangover would be worth to them by the time the banks opened even though I’d given them double what the closing fx rate was when I entered the bar.


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