UK to fare worst?

So says the FT, based on the IMF's figures:

Britain is facing the deepest recession of any big industrialised economy, the International Monetary Fund signalled on Wednesday as it said that the UK economy would shrink 2.8 per cent this year.

This is correct, but it is largely because the UK had a very bad end to 2008. Annual GDP growth is calculated as the sum of GDP in 2008/sum of GDP in 2007. In 2007 UK GDP was £1,267bn, in 2008 it was £1,276bn, a growth rate of 0.7%. 2009 GDP is therefore forecast to be 2.8% lower than £1,276bn, i.e. £1,240bn.

But more than half of this deterioration has already happened. Q4 08 GDP was £314.3bn, which if repeated for each of 2009's four quarters, would mean 2009 GDP of £1,257bn. That would mean 2009 GDP would be 1.5% lower than 2008 GDP, even though GDP had not fallen in any quarter of 2009.

In fact the IMF expects Q4 09 GDP to be 1.5% lower than Q4 08 GDP, so there is more shrinkage to go. But this is only the same as Spain, and better than France (-1.8% GDP*).

So I'd say we were unquestionably the 2nd worst economy in the G7, but only probably the first.

* France is a strange one as the Fund expects a rebound in 2010 of 2.2% Q4/Q4, the best by someway in the G7.

These four Lords must be voted out at the next election

I can't be bothered to read in much detail the allegations against the (four?) Lords which the Sunday Times has made. They look pretty guilty, you'd have to say, but of what it's not so clear cut apparently. I saw the amount was £120,000, I'm not sure if that is each, but perhaps Dan could tell us whether this represents inflation or deflation in bribing a member of parliament. If it's each it looks to me like moderate inflation.

Anyway the important matter is that their constituents, or the people of the country, should have the opportunity to vote them out at the next election.

A solution for RBS

Doesn't it print its own banknotes? All it needs to do is issue a £1bn note*, print 30 of them, and hey presto, all is OK. There was something about it having to lodge equivalent funds at the Bank of England, but I'm sure they'll ignore that provision given the severity of the crisis.

* It might be hard to get your average English corner shop to accept them. "It's not the £1bn denomination I have a problem with, it's that its Scottish...".

Congratulations to President Obama

I'm not sure the Chief Justice's error (and Obama's confusion and then repetition of the error) over the 'faithfully' bit of the oath matters much, but I imagine as we speak Melanie Phillips is scouring the wackier corners of the internet (her site excluded) and deciphering it as further proof that the President (perhaps aided by the Chief Justice) plans to destroy America*. Well we'll get a lot of that kind of thing over the next few months, but for today congratulations to President Obama. I issue the first invite by a British blogger to the President and his wife to come and visit blog HQ here in Kensal Rise. Email details to the right.

I'm enjoying the US TV coverage. I think the picture and sound quality is a bit poor (the Congressional lunch seemed a bit like a wedding video), maybe it's all those stone buildings and low sunlight. But that they have cameras everywhere is fantastic, I imagine in Britain we'd have Dimbleby I or II telling us that they were now off for a lunch and we'd never see any of it. And the commentary is excellent. I wouldn't like to be interviewed by one of those female reporters, who continually ask a million questions to which you've already indicated you don't know the answer.

* A signal? We've already had (to give but a taste) her view that Obama will 'aid' America's enemies, that he believes the US is the 'real source of evil in the world', that he 'endorses the philosophy...of anti-white racists, Jew-haters, revolutionary Marxists, unrepentant former terrorists and Chicago mobsters". Of course this says more about her than the American people or anything else.

Update: I would also second Stephen's comments. A lot of people are over-excited, for sure, and have started seeing positives where they would perhaps have seen negatives ('well his car needs to be that size given the terrorist threat', '$150m is really that much for such a big event'). But on the crashing bore scale they are minnows compared to the people who seem to think they are imparting great wisdom in telling us that the highest expectations won't be met.

It's my birthday and it's the most depressing day in History

and looking out of the windows the weather is certainly living up to what for the last few years (the Monday nearest to my birthday, in any case) has always been labelled 'the most depressing day of the year'. It even has a Wikipedia page. This was meant to be a combination of credit card bills, not having been paid, the weather and so on. This year however a usurper turned up, January 5th.


But it can't dislodge today. According to the Daily Mail - apparently January 19th 2009, my 34th birthday, is 'the most depressing day in HISTORY'. I'm pretty gutted to now be in what is probably middle-age, but it's not that bad, surely?

Theory ahead of practice

Tim Worstall argues that a proposal that British banks concentrate more on British lending rather than overseas lending, would kill 'millions of people' because:

Someone, somewhere, has to be moving capital from low return areas like the rich world to high return but risky areas like the developing world. That’s how the developing world is going to get rich, when they have the capital available to build and develop.

I think one can make a case that this is not, in fact, what has happened in the last decade or so, with respect to financial flows, development and banking.

GM's new small car

GM's new small car
Originally uploaded by mjtphotos

After a bad 2008, GM have today announced their new lightweight, fuel-efficient "compact" to beat their Japanese competitors.

Robin Page's blog

If the ink was red the design would be complete, wouldn't it?

The strapline is "A Real Tory, not a Notting Hill Tory". This is interesting. First, yeah for the NH Tories if that's the case. But second, so the Daily Mail (and I think we can use the term here as they presumably design the strapline) believes that David Cameron is not a real Tory? What do they think he is then?

Full Marx

Someone sent me this 'quote' from Karl Marx:

"Owners of capital will stimulate the working class to buy more and more
of expensive goods, houses and technology, pushing them to take more and
more expensive credits, until their debt becomes unbearable. The unpaid
debt will lead to bankruptcy of banks, which will have to be
nationalised, and the State will have to take the road which will
eventually lead to communism."

I'm not sure that's quite right. Wasn't there a

"Bill Clinton's Community Reinvestment Act however will be the most destructive element" in there somewhere as well?

Excellent European art installation

Every school should have one.

Gladstone in 1895

Gladstone in 1895
Originally uploaded by mjtphotos

I found this photograph in an old book, it's Gladstone in 1895, after he had retired and a few years before his death.

Click on it and then select 'all sizes' to see it bigger.

Thaw causes chaos

Does everything cause chaos for jounalists?

VAT cut 'a tragedy'

Blimey Dave doesn't like the VAT cut, does he?

As I have pointed out for consumers (there are other issues for retailers) the fact that retail sales haven't risen (if they haven't) doesn't mean much about whether it is has worked - if it is 'costing' X billion then consumers are benefiting (or retailers). If I have spent £1,150 this month on VAT-able goods, then I have saved £25 pounds compared with earlier months.

But Tim provides some evidence that such a cut will boost retail spending. He notes the example of a store than cut its prices by 1p, and which took 70% of a competitors' sales. Of course if all stores cut by 1% they won't gain business from other stores, but the article quotes a shopper:

"I would certainly cross the road if it meant I could get a similar item a penny cheaper," Karl White, 21, said. "The more you buy for 99p, the more pennies you save. I have just bought six items, so I've saved 6p.

"

How must that man have reacted to the 2.2% cut in VAT?!

Blair to receive Medal of Freedom

On January 13th with John Howard, Alvaro Uribe, and probably Ariel Sharon. I'm thinking of starting a facebook group demanding UK TV channels screen it live.

Oliver Kamm joins the Sun?

Not sure how long this will last for, but if you click on his blog it seems to be part of the Sun newspaper, not the Times.

Conservative economic proposals

No tax on savings probably has some consequences (negative and positive, such as disincentives to work) I haven't thought of, but otherwise seems welcome. However when rates are less than 1% the cost is pretty negligible (as are the benefits). In reality this bit is probably the interesting bit:

These changes would be paid for by restricting all Government departments – except for the NHS, schools, defence and international development – to a 1% real increase in spending in 2009/10.

I'm not sure how this fits in with other commitments. Both the mundane but important - presumably this means the unemployment benefits will need to be cut quite sharply if the recession is as deep as expected - to the eye-catching but never-going-to-happen, such as a 'high-speed' (really 'higher speed') rail link to Leeds.

Ariel Sharon is still alive

I've just realised.

Cameron on VAT

I don't really understand his criticism. He talks about it being a waste of 'our money', but if that is how he views tax cuts then it's very abnomal within the Conservative Party, and only makes any sense if he plans always to run a balanced budget.

That retail sales are falling (if they are) is not the relevant comparision. It isn't even really whether they are falling more than they would otherwise. A VAT cut has two effects for consumers, the first is that prices are cheaper, so they should buy more goods rather than save, and second their real income is now higher, so they can save more/pay off debt. The cost to the government is, give or take some small other factors, the gain to the public (at least in the short-term) and so what is probably most relevant is to what extent it is spread about.