Member Article

Growth revision illustrates a misplaced focus of concern

Today’s GDP release showed a revision of growth down for 2010 and up for 2011, altering the peak-to-trough fall in GDP from 7.1% to 6.3%.

These latest figures show that GDP revisions continue for months and years after they are initially announced. However, with every announcement that is made, there is analysis of every percentage point change as the economic gloom is continually talked up, even though we know these are likely to be inaccurate.

However, the focus is wrong and it is only now that some commentators are starting to accept this. GDP is not the best indicator of the health of the economy, because it measures a lot of activity which is actually of little value.

A greater focus should be placed on the extremely unhealthy trade deficit, which simply means we’re consuming more than we’re producing. Just because it has become normal doesn’t mean it’s right. Within a few years we’ll be in the same state as Greece.

The solution is simple. We need to make more of the goods we currently import and stop being seduced by cheap goods from overseas; goods that we can only afford by increasing our borrowings. The country’s already paying the unemployed to do nothing so the relative cost to make our own stuff is even cheaper than importing, but we need the government to organise it. This would be better use of their time than recalculating last year’s GDP, or changing the House of Lords.

• In 2004, John led the successful campaign against a Regional Assembly in the North East and he was a regional chairman of Business for Sterling the pro-pound business organisation.
• John is also campaigning for greater focus the trade deficit which he believes is under-acknowledged as an indicator of the health of the economy, and the ability of manufacturing to make a positive contribution to the necessary rebalancing.
• A website for people to find out more about this campaign is online at www.stopgapuk.com and other manufacturers are being urged to add their voice to the debate.

This was posted in Bdaily's Members' News section by John Elliott .