Friday, 26 July 2013

GDP growth 0.6%

Apparently the UK is back on the road to growth with GDP rising at an impressive 0.6% quarter on quarter.

We have a £1.4 trillion economy so in the last three months UK PLC has grown by 8.4 billion pounds.

The only trouble is the government has borrowed about 35 billion pounds over the same time period. This is money that has been borrowed and injected into the economy to pay for government spending. And the economy did not even grow by the amount spent!

Clearly there is an underlying collapse of economic activity. Without the government bung the economy would have shrunk by more than 5%.

This is unsustainable. The government cannot keep borrowing forever.

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