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Wednesday, 25 February 2009

UK private sector activity down 10% year on year?

The extent of Brown's fantasy economics are clear. 4 Q 2008 GDP is now estimated to be down 1.9% year on year, but with the rate of government spending going up at 6.8% that implies the private sector is doing really badly. How badly? Let's do the math.

GDP for the 4th quarter was down 1.9% at £ 314 billion. Lets say that on an annualised basis that is £ 1,256 billion annually, which implies it would have been £ 1,280 billion a year ago. Government spending for 2008 was £ 577.4 billion, which would have has grown 6.8% from £ 521.6 billion.

Doing a bit of substraction tells us that private sector activity in 2008 was about £ (1,256-577.4=) 698.6 billion down from £ (1,280-521.5=) 758.4 billion the year before which is a fall of just under 8%.

With inflation at 3%, the actual volume of goods and services is down over 10% according to the back of this envelope. What does it say on the back of yours?

1 comment:

an ex-apprentice said...

Return to Sender. Unpaid postage.