UK GDP: UK Creates Unproductive Jobs

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UK GDP: UK Creates Unproductive Jobs

UK GDP: UK Creates Unproductive Jobs



UK spread betting markets are taking a breather following the recent strength and all eyes will be on this morning's GDP data.

The focus will be particularly intensive as there's a reasonable chance that the UK economy may suffer from the dreaded triple dip recession.

If, and only if, we see a contraction today for Q4 and then a contraction in Q1 of this year can we officially say that the UK has suffered a triple digit recession.

Nevertheless, following the Olympic bounce over the summer, which led to a 0.9% expansion in Q3, it would mean that the UK economy is not really in a recession, just flat-lining.

That has been the unfortunate story for the UK over the past few years.

All it means is that the Chancellor's fiscal targets will not be met as we borrow more and, in order to meet those targets, austerity will be required for longer.

But whilst we might very well see a contraction in today's Q4 figure, earlier in the week we saw once again that UK employment reached a record high and jobs are being created.

Interestingly, however, these jobs don't seem to be particularly productive as output simply isn't growing and wage inflation remains well below real inflation.

The bizarre position that the UK economy finds itself in is why expectations are for a stronger recovery in growth later in the year, to bring the whole of 2013 in at around the 1.0% mark. Having said that, if today's data disappoints to the downside then we may struggle to hit that.

Also today, the German Ifo sentiment survey could compliment the stronger manufacturing data and ZEW survey from earlier in the week and this might be enough to give European indices a boost after opening lower.

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By Simon Denham, 25 January 2013


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