2023Q2 Growth Data from the ONS

 Today the ONS published the UK growth data for the period May-June 2023. 

Well the good news is the economy grew by 0.2%.  Considering May was negative (-0.1%), this is positive news.  May growth was explained away on bank holidays and the Kings coronation and apparently June's 0.5% was compensation for May's poor performance - maybe the weather also helped.

Although we may view this as good news, the pessimists at Threadneedle Street are probably looking at this as bad news.  Their interest rates are not working and we need more of their evil poison.

Although this may seem good news, GDP is pretty much at pre pandemic levels.  If growth had followed the same pre pandemic trajectory we would be at an index rating of about 105 compared to 100. 

I'm not a great fan of GDP as a measure.  For example if everyone in the country replaces all light bulbs with LED light bulbs, GDP would fall.  We would be much more efficient, less wasteful etc yet GDP would fall.

Also GDP hides things. For example governments like immigration.  More people means more demand for stuff which means a higher GDP number.  By allowing open immigration our GDP number improves.

So we can use the GDP per capita measure to try and correct for this.  This takes the GDP number and divides it by the UK population.  So if we have uncontrolled immigration or lots of unproductive people off sick then the GDP per capita will fall.  It's a measure of productivity.

Now the GDP per capita has not recovered to pre pandemic levels.  In Q3 2022 it was £8,220 (£32,880 per person) versus Q3 2019 which was £8,386 (£33,544 per person) so it's 2% lower.

Using the Bank of England inflation calculator they value 2019's £33,544 as £40,903.09 in June 2023 - 18% less than 2019.    In real terms there has been a massive fall in GDP per capita since the pandemic.

Official data shows the UK populated was estimated to be 67.62 million in Jan 2023.  I personally think there are lots more people in the UK than officially reported however we'll stick with this number.

The population data for 2019 was 66.78 million so the population over this period has grown by 840,000  (1.3%) yet in real terms GDP per capita has fallen by 18%. 

In year to March 2023 there was 487,771 work visa issued,  632,006 study visas issued.

So GDP per person is falling.  Either the immigrant work force is not highly skilled or the native population is becoming unproductive.

Either way the 0.2% is not something to be proud of.  We are 18% worse off in real terms.  Inflation is doing it's magic to make us poorer.