Those economic growth rate predictions...
Having examined the debt to gross domestic product (GDP) predictions and outcomes in a previous comment on this year’s fiscal policy paper (FPP) which accompanies the budget (although it was much-delayed this year), I turn now to the figures given on economic growth.
Their seems to be some improvement for 2016, but the data show clearly that the fluctuations in the quarterly economic growth rate over the last three years have been driven very much by agriculture (except manufacturing doing well in the second half of 2015), and therefore mostly by the vagaries of the weather. The underlying rate, omitting agriculture is about 0.7 per cent, which is not enough to grow us out of debt.
As for the debt to GDP ratios, the economic growth predictions are always over-optimistic, suggesting again either a failing of method or a deliberate overselling to persuade us that austerity is the best medicine.
The attached is based on information extracted from successive FPPs.
The shaded figures are the outcomes, the unshaded are the predictions. Reading downwards for each fiscal year shows the extent of the overestimation. In 2011/12 growth of 2.3 per cent was predicted with an outcome of minus 0.7 per cent.
In 2014/15 the prediction was originally 1.9 per cent, but with an outcome of just 0.2 per cent.
For 2016/17 the prediction was 2.2 per cent, and the current estimated outcome is 1.6 per cent.
The 2017 FPP predicts growth rates reaching up to 2.7 per cent by 2021. Not only is this still insufficient to grow us out of debt, but will those predictions actually be met? Or does the Government and International Monetary Fund programme need to take more seriously the growth agenda, making it more than lip service and an Economic Growth Council target.
Paul Ward represents the Campaign for Social & Economic Justice. Send comments to the Observer or