For the fourth consecutive Bank of England healthcheck of the economy, growth has been revised downwards and inflation has been revised higher. Both of these key UK economic metrics going in the wrong direction for the entire year of the Coalition Government.
Today Mervyn King said inflation was heading for 5% later this year on the back of a 15% rise in domestic gas prices and a 10% hike in electricity prices. Yet more consumer pain, on top of tax rises, cuts and economic uncertainty. He also said the economy was in a “soft patch”. The Bank of England also confirmed my reading of that 0.5% Q1 GDP figure. If you abstract the snow, you would have had 0% growth in both the Q4 2010 and Q1 figures.
But there’s something more. What if the depressing last two quarters of UK GDP figures are not an aberration, but a taste of the new economic reality?
In an excellent analysis in this morning’s FT, Chris Giles mused that these poor anaemic rates of growth may actually be the new normal. The former Deputy Governor, Sir John Gieve, recently suggested growth of 1 to 1.5% might be par for the course. Our economy has been flattered by occasionally illusory growth in financial services, that frankly put, is not going to return.
It’s what you might call, after the Great Recession of 07- 09, “the Great Stagnation” 2010-????.
Yep, slow strangulation by high inflation is our destiny now, I think. There won't be any hyperinflation - wages will be kept down, and general inflation will run at something like 3%-5% above wage inflation. This means there won't be some day when the cashpoints just stop working (not in Europe anyway), but that everybody will just feel more and more squeezed from every direction as their real spending power is eroded away. TPTB then have a choice...they can either come clean and explain that this is the new reality or they can go on pretending they can somehow magic some serious economic growth from somewhere and hope the revolution doesn't occur on their watch.
Pub conversation recently, in which I didn't say or prompt anything, included the lines, "We've live through the best of times" and "I can't see growth of the economy returning" and there were general nods of agreement. Ordinary people.
Sad really, particularly how we didn't make more out of them.
The remaining high quality fossil fuels should be equitably used to get human society off fossil fuels. I suspect that's not going to happen. I wonder why?
I experience pleasure and pains, and pursue goals in service of them, so I cannot reasonably deny the right of other sentient agents to do the same - Steven Pinker
I'm impressed that you were in a pub with people who accepted the reality of our changing future.
Even my husband, who has been relentlessly educated (by me!) about dwindling fossil fuels, climate change, and a continuing economic crash is having difficulty accepting that the future he expected is beginning to disappear.
Almost everyone else I know just ignores me if I try to talk about the fact that things are never going to get back to BAU. They all think that if the government just decreases the tax on petrol, and banks allow people to start having massive amounts of credit again then everything will be OK!
Layla wrote:I'm impressed that you were in a pub with people who accepted the reality of our changing future.
So was I (well, impressed by the conversation). It's a quiet-ish pub where you can actually talk. And talk about, well, just about anything. Nice blog by the way.
I experience pleasure and pains, and pursue goals in service of them, so I cannot reasonably deny the right of other sentient agents to do the same - Steven Pinker
Last week I found myself killing 15 minutes sitting on a bench in the middle of Redhill. There were three 20-something males drinking cans of beer - quite clearly not the sort with a particularly high IQ, but friendly - offered me a cigarette (I probably looked like I needed it). Anyway, they were moaning about the cost of living going up and how they could no longer afford to go to the pub and I mentioned peak oil to them. This came as no apparent surprise: "Oh yes, it's all about oil....the wars, the cost of living...we know it's all about oil."
If this awareness has trickled down to the street drinkers, I guess most of society must be in the process of waking up to it.
I think people who are already out of the system and on the street have the time and the mind set better able to conceive that BAU is broken and going to stay broken. After all, for them it has never been anything else.
It is the middle class middle management dynamic 30 somethings looking for that big promotion or that bigger mortgage who are going to struggle.
It is the middle class middle management dynamic 30 somethings looking for that big promotion or that bigger mortgage who are going to struggle
Agreed. I hate those kind of "fellows" (edited - Ken)... so no sympathy there...
UE- you do live in Brighton which is one of the most Peak Oil friendly cities in England, its not exactly Middle England... but I do agree that some people are starting to realise that the good days are not coming back. Had a similar conversation with a friend recently.
Peace always has been and always will be an intermittent flash of light in a dark history of warfare, violence, and destruction
RGR we were building wind turbines even when oil was $10.
We didn't build so many because coal and natural gas were also cheaper, and even at $10 we didn't use much oil to make electricity.
However, we did build them because they have lower overall CO2 emissions. And because they were decentralised generation, with all the social and community implications that has, together with smaller unit size, so smaller organisations could invest in direct generation, without resorting to corporate funding.
You may not like it, but people did it, and will continue to do it.
RalphW wrote:RGR we were building wind turbines even when oil was $10.
True. But now we are doing MORE. So how can anyone claim with a straight face that we aren't using fossil fuels to move towards a cleaner energy future?
They can claim (as I do) that we're not doing enough. And not just WTs by the way: I include forestry, solar, tidal, food, and adapting (where poss) our remaining nukes and the less-offensive of the ffs as back-up 'til their sell-by.
We could do a lot more in the UK by increasing the tax on cars over 1.5 to 2.0 litres to punitive levels. Increasing building insulation levels now is another measure and mandating the insulation of older houses when they are "improved" would help even more.
