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Saturday 29th July 2017
Hi Friend,
Growth up 1.7% in second quarter ... IMF issues a warning ...
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The preliminary estimate of GDP in the second quarter was released this week. Output growth increased by 1.7% in the period April to June, compared to the same period a year earlier.
Is the growth rate slowing? Yes is the apparent answer. Compared to the first quarter of the year, growth has slowed from the 2% level reported in the period January to March 2017.
In the first six months of 2016, growth averaged just under 1.7%. For the year as a whole the growth rate was 1.8%. So not much of a slow down in the economy as yet. Analyse the detail and service sector growth was 2.3%. Exclude the public sector, the private service sector growth rate was 2.7%.
The volatile production and construction sectors inhibited growth overall. Construction growth increased by less than 1%. Manufacturing output increased by 0.3%. Mining and utilities output were down year on year. The sectors are volatile and subject to revision. For the year as a whole it seems reasonable to expect growth of around 1.7% to 1.9% despite the looming fears about any EU deal.
Should we worry about growth in the UK this year? The IMF appear to think so. The IMF is warning about the UK current account deficit. The largest of the 44 countries under review, the current account deficit is 4.4% of GDP. The UK must bring down the trade deficit warns the IMF. Financing the deficit risks are "reduced" in the near term. Over the medium term, funding may become a more critical issue.
Slower growth in the UK may suggest the Bank of England may have time to adjust the internal monetary framework. The IMF is giving a clear warning - matters may be taken out of local hands if there is no improvement in the fundamentals of external trade and finance. The Old Lady may be obliged to act to take away the punch bowl but the IMF will turn off the music .... for the moment, the ask is just to turn it down a little ...
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A Vision for Transistion ...
Theresa May is walking in the Alps, Boris Johnson is waking in Australia, Liam Fox is buying chickens in America. Time to close the borders and pull up the drawbridge. Certification and qualification may leave the absentees without sufficient immigration points to make the home run.
For the moment it is left to the Chancellor Phillip Hammond and Amber Rudd to present the vision for transition. It's a sort of Free trade, inside the customs union, with free movement of labour, all subject to adjudication by the European Court of Justice. Excellent. It's a sort of "Status Quo Ante Referendum". All we need now is an indefinite rolling extension to the transition period for 2020 and beyond. Businesses can then relax and concentrate on more immediate matters in hand.
Squaring the circle, inside a four dimensional cube, may seem more plausible, than a trade deal with the EU. A deal which will meet the conflicting ambitions of the Tory Party and the disparate objectives of the 27 member states. A transition offering Free Trade, inside the customs union which is not actually access to the single market inside a tariff wrapper, is the presentation pack to the back benches.
Good luck with that. It is the silly season after all. The vision for transition would include a "back to the future" option, predating June 2016. As Phillip Hammond explained driving a train (and tardis presumably) is so easy even a woman can do it. Yep, and it's cheaper as the BBC demonstrates ...
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Sopranos in the West Wing ...
The best show in town offered a new twist this week. Anthony (The Mooch) Scaramucci moved into action. Think "Sopranos in the White House" or "The Godfather meets the GOP", there is no doubt Trump has made a great hire, in the quest for ratings.
The head of communication did not hold back. "Here in Washington, people stab you in the back!" explained the Mooch to Emily Maitlis this week. "Where I come from we look you in the eyes and stab you in the front". Excellent! The Mooch lurched towards the Newsnight handler, an obvious devotee of the Cult of Personal Space Invaders.
"Don't touch Emily" we screamed from the couch, fearing the hidden stiletto. Some just had to turn away. It was all too much. As it was he called Emily Maitlis elitist. Imagine! The President is not elitist, it was explained, he eats Pizza and Beefburgers ...
If you want to "Drain the Swamp, Hire a Sewer Rat" must be an old Bronx expression. Scaramucci explained his admiration for Reince Priebus and Steve Bannon in fond four letter vernacular. By the end of the week, John Kelly became Chief of Staff. Reince Priebus "Sleeps with the Fishes" and Steve Bannon sleeps with "One Eye Open". The Mooch is in the camp!
Trump was out and about this week. Others moved in damage limitation exercise. The head of scouts apologised for the political rhetoric inserted into President's address to jamboree last week. The generals explained there would be no change in policy for trans gender military, despite Trump's three tweets on the subject. [Yes some issues are just too complicated for 140 characters.]
The police hierarchy explained there would be no change to the treatment of suspects in police custody. The President had suggested the definition of "soft on crime" included the shoving of suspects into the back of the car ensuring there was no banging of heads. "When you guys put someone in the back of the car ..." Don't feel you have to wait 'til you get back to the police station to ...
The Senate moved to block and ensnare Trump this week. John McCain delivered the "Coup Sans Grace" to the "Skinny Legis" option for health care. In a dramatic thumbs down from the Senator, the White House lost the vote. The bill foundered. McCain remembers the taunts from the President about the Vietnam war. “He’s not a war hero. He’s a war hero because he was captured? I like people who weren’t captured.” Said the President about John McCain's war record. Who said politics and diplomacy was difficult!
The Senate and Congress don't like the way Trump is taunting and teasing Jeff Sessions, the Attorney General. Trump will have difficulty enacting legislation and budget. The Fed runs out of money in three months time. The house moved to impose sanctions on Russia, leaving the President with no option but to sign the deal.
The domestic drama continues, the Kremlin seized U.S. properties in Moscow, missiles flew from North Korea, Chinese ships sail in the Baltic Sea in joint exercise with the Russians ... The international drame is escalating! Sooner or later the chlorinated chickens will come home to roost ... the fiasco cannot conceivably run full term ...
That's all for this week from The West Wing, Whisky, Tango, Foxtrot ... You can check out the series of blog posts here or leave any comments or LIKES on the Facebook page here ...
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John
That's
all for this week. Have a great week-end ... Don't Miss the Economics Conference on the 13th October. Our theme is the Economics of Greater Manchester. We will be talking about the Inclusive Growth Challenge, Balancing the Books and the Sectors Driving Growth in the City Region! Another Great Conference in the pro-manchester series ... Book Now Don't Miss Out ...
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