Good news also comes in threes

Certainly the economic indicators for January 2011 now constitute threefold good news.

First it was manufacturing up, then the construction industry reported its January upturn, and today the service sector is also reported to have had a very successful month, growing strongly. In fact, it was much stronger than expected, with a sector Index (PMI) of 54.5. It was low at 49.7 in December, probably affected to some extent by the severe weather. January's figure represents an eight-month high, not just an improvement over December!

Even the retail sector has (as I suggested before that it would) been doing far better overall than Labour like to pretend:

"Kevin Daly, Goldman on retail PMI: 'If we average the index over past three months it's above the pre-recession (1997-2007) average.’"

These are all quite significant boosts, too, not marginal ones, and they are early indications (as there's still a very long way to go) that the country is getting back on its feet.

Citi seems to agree, also that last week's ONS growth figures were just plain wrong!

As long we don't have vast snowfalls or other unseasonal disruption, I expect the overall trend to be broadly positive across the various sectors from now on.

Voice of authority

There are several authoritative bodies publicly giving their views of nations' economies and relate matters, and in Britain we have the Bank of England, the new Office for Budget Responsibility (which is turning out to be valuable) and the IFS (Institute for Fiscal Studies).

The last of these has had a somewhat mixed reputation, with some statements and predictions that were way out of kilter with other outfits and with what turned out, but seems more recently to have got its act together.

There are also international organisations such as the IMF and the credit agencies such as Moody's and Standard & Poor. All of these are significant in not only judging how we as a nation are performing and our prospects, but also how others (the movers and shakers) view us. In the case of the credit rating agencies this can be crucial in establishing our loan interest repayment rates, so those perceptions are very important.

It is in that context that we see the IFS's latest assessments as being of value. There's a string of out that came out at the beginning of the new month (i.e. February), and they have been summed up in a series of tweets issuing from Tory Press HQ thus, starting with the IFS's assessment of the situation in Britain just a year ago:

• IFS: 'Last year widespread concern that UK might not get funding from financial markets. Rating agencies said UK AAA credit rating threatened.'
• IFS: UK government bond market over past year shows investors believe the UK deficit problem will be dealt with effectively.
• IFS: Coalition plan more credible than Lab: 'completing fiscal repair job in 1 parliament [is] more credible than a plan to tighten in a future parliament.

I think that is fairly conclusive!  Here's Pete Hoskin's ten-point summary of the IFS's new Green Budget, which makes interesting reading is an easy-to-digest form.

Interestingly, from the same Twitter source, has come this very telling Tweet regarding the Opposition's response (or lack of any) to one of the items of distinctly good news on the economy that emerged yesterday:

"Labour oddly silent on manufacturing stats yesterday and oddly silent on construction stats today: sector returned to growth in Jan"

Hmm. Nothing even from Ed Balls? It seems not!

And now for the good news...

After all the doom and gloom in recent weeks, most of which was concocted by Labour and their chums in much of the media, the confidence that some of us showed in riding out the storm (well, snow) has been shown to be justified.

Instead of "talking Britain down", as John Major used to say when he was Prime Minister, some commentators (generally those who understand something of how economies operate) were content to let short-term difficulties, outside human control, work their way out of the equation.

Thus it comes as no surprise today, the first day after the end of January 2011, to learn this:

"UK manufacturing PMI rose to record high in Jan. Expansion in UK manufacturing & employment highest for 19 years"

Here is the News Release (PDF file) from the Chartered Institute of Marketing and Supply. Note that we are cautioned that inflationary pressures 'continue to surge', but that is what those in the know expected for the time being.

A large cause of that surge has been the huge Quantitative Easing (i.e. printing money, which is then devalued in the world market from where we buy so much) during Gordon Brown's premiership, some of which has had to be continued for a while after he resigned as PM (one of Brown's many nasty legacies).

As always, the key point is that the rot has been slowed in some areas, halted in others, and the British economy continues on track to a slow, hard but eventual recovery. We've seen it before, during the Thatcher years, and Labour tried all the tricks then that they are attempting now.

This is why we should take no notice of them and continue to repair the damage, just as was done during the '80s. Now, as then, this is the only realistic way to recover, ever.

Balls on Marr

Not exactly unexpected; but here it is anyway: Ed Balls trying to spin the line that "there was no debt, except that caused by bankers, and no deficit under Labour" - or something very close to that (it's a bit fuzzy!) despite the easily-provable facts:



UPDATE 31 Jan: Full Facts seems to disagree with Balls as well...

A trillion pounds

The moment-by-moment debt clock is, as I write this, rapidly approaching the one trillion pounds mark. Of course, this is only the part of our national debt that appears in the official books. The real amount is nearer five trillion!

Update at 5.16 pm: the clock has just this moment passed the one trillion pound mark!

And now for the good news

Chancellor George Osborne has been able to report some good news on the economic front today, and a little that is not so good. Remember that the economic forecasts are now being produced independently, by the Office of Budget Responsibility, rather than manufactured and manipulated for the convenience of the government of the day - as was notorious when Gordon Brown was first Chancellor and later PM.

First, this year's economic growth is one and a half times that forecast (1.8% as against the expected 1.2%), though the bad news is that the next two years' expected growth has been adjusted slightly downward, from 2.3% to 2.1%.

Further good news is that there is expected to be at least £6 billion budget surplus by 2015. I also read that the number of public sector jobs expected to go is well down from its earlier 490,000 estimate to just 330,000 - a drop of a third. There will also be no double-dip, we are told - not exactly news, and not a hundred percent certain (virtually nothing is) but it is yet another encouraging sign that such a clear-cut statement can be made with confidence.

I think that, on balance, this is broadly good news, and we can trust it as well!

The Institute of Fiscal Studies (IFS) is saying that this is inaccurate, but I haven't been able to find any evidence that they might have presented to back up their claim.

Facility or mechanism?

At last it looks as though the picture is significantly clearer this morning, regarding the recent uncertainty (by some) whether the UK was or wasn't included in treaty changes within the EU.

It transpires that there are two separate bailout systems:

• The European Financial Stabilisation Mechanism
• The European Financial Stabilisation Facility

The first of these was agreed to by the previous (Labour) government, is still binding upon us, and would mean than we'd have to contribute some 12% of any bailout to Ireland if it should become necessary. It would probably amount to somewhere between £6 billion and £10 billion, according to different newspapers' reports. That's the EFS Mechanism.

The EFS Facility, however, applies only to those countries within the Eurozone, so doesn't affect Britain.

Well, I'm glad that's now (hopefully) cleared up!

Trillions!

There's a very good programme on Channel 4 (of all places) that is very honestly and bluntly stating the huge level of debt in this country, and what it means for future generations. It also teaches a number of lessons about the public/private sector balance and the dishonesty of those who claim that reducing public expendture takes money out of the economy. It doesn't: quite the opposite, in fact.

The ninety-minute programme (81 minutes without commercial breaks), presented by Martin Durkin and titled Britain's Trillion Pound Horror Story, is a must-watch for everyone in Britain.

Tweet of the Day - 29 Oct 2010

From Guido Fawkes, regarding one hugely significant result of Gordon Brown's handling of the nation's economy as Chancellor and PM:

"UK External debt (as % of GDP): 428.8%. Thanks Gordon."

The Real Test

One of the only true tests of whether Britain is going to survive as an economy, and not go the way of Greece or ultimately even Zimbabwe, is the confidence shown by the international credit agencies.

Without their belief that we can service our debt, their interest rates would rocket and we would effectively be bankrupt. It was no secret that such an action was very much on the cards prior to last May's General Election, and that only the prospect of a change of government away from Labour stayed the hands of those crucial credit agencies.

It is therefore a considerable relief that Standard and Poor (who along with Moodys form the Big Two in this arena), having previously retained Britain's AAA rating (which had been at severe risk of downgrading at the beginning of this year), today show that AAA rating as being stable.

This is the real test; and although other organisations have parts to play, do be careful or contrary pronouncements by those who are paid for out of the public purse. Their views cannot be trusted if they go against what S&P and Moodys are deciding and how they act, and the latter duo have actual financial expertise and represent the real world, not the (generally lefty) public sector.

Therefore let the real experts indicate what is true, and (if they are up to it) others such as the IFS flesh out the details in an attempt to be helpful and of value. If they can't or won't do that, then I can't see any value in having them and perhaps they could be scrapped.

It could happen here

What has happened in Ireland is a stark warning to us here in Britain. It could happen here too, if we are not careful. It almost certainly would have happened by about this time if we'd still had a Labour government.

There is a lot of useful information in Jeremy Warner's article in The Telegraph, especially how much the Irish situation has changed in just a few years. Their budget deficit has shot up from 12% to approaching three times that at 32%. Their overall national debt is up from less than 25% of the country's GDP to almost the full amount, and looks set to rise to around 150%.

House prices have halved, salaries have been slashed, and it is all heading south over there. We must not let something similar happen here. We have the benefits of a larger scale of economy, which provides some capacity for dealing with extraordinary times, and an independent currency (no Euro here!) but we cannot afford to be complacent.

Fortunately we now have a government that is generally on the right course for recovery, as leading independent bodies have been confirming for some time, most recently the IMF. Of course, that has meant that Labour and their supporters are now trying to rubbish the IMF, as its messages don't agree with what they are (incorrectly) claiming. Remember: we know that they've never had a problem with that organisation before, especially when Denis Healey had to go to them when Labour last almost bankrupted our country and ever since.

Indeed, Gordon Brown is known to have been trying to get more funds into the Fund so that they could bail us out again, in case he had remained Prime Minister.

I suppose we just need to remain alert and not forget the past, both recent and historic. Labour always bring Britain to the verge of bankruptcy, and they always lie about it.