Friday, 23 August 2013
Prospects for the UK economy
Prospects for the UK economy As we hear today Britain has seen some modest growth figures. Is this cause for celebration or a false dawn? — Britain's economy grew faster than thought in the second quarter, official data showed on Friday, extending a broadly based recovery. Gross domestic product (GDP) -- the total value of goods and services produced in the economy -- grew by 0.7 percent in the second quarter, the Office for National Statistics said in a statement. That marked an upgrade from the initial estimate of 0.6-percent expansion. Growth occurred across all sectors of the economy, with small upward revisions across manufacturing, construction and parts of services. Second-quarter GDP growth has more than doubled from the 0.3-percent expansion that was witnessed in the first three months of the year. The economy expanded by 1.5 percent in the second quarter, or three months to the end of June, compared with the equivalent period in 2012, the ONS added. That was also up from the previous estimate of 1.4 percent. Sterling and the London stock market shrugged off the news. Market expectations had been for no change to both figures, according to analysts polled by Dow Jones Newswires. The ONS added that construction activity expanded by 1.4 percent in the second quarter, up from the initial estimate of 0.9 percent, as the housing market was partly lifted by state schemes that are aimed at stimulating lending to homebuyers. Factory output grew 0.7 percent in the quarter, up from the prior figure of 0.4 percent, while consumer spending rose 0.4 percent. There were also upward revisions for output from distribution, hotels and catering firms, as well as business services and finance firms, and the agriculture sector. Britain's shrinking net trade deficit, which dropped to £3.2 billion ($5.0 billion, 3.7 billion euros) in the second quarter from a £4.3-billion deficit in the first quarter, also boosted growth as exports hit a record level. Friday's data comes one week after news that British retail sales -- a vital indicator of consumer confidence -- jumped 1.1 percent in July from June as a heat wave fuelled spending on food, drinks and summer clothing. "The slight upward revision to Q2 GDP continues the run of good news on the UK economy and the spending breakdown looks reasonably encouraging too," said Vicky Redwood, chief UK economist at consultancy Capital Economics. "The initial estimate of a 0.6-percent quarterly rise has been nudged up to 0.7 percent and now looks even better compared to the more modest rises seen in the US and euro zone in Q2. "As indicated by the timelier retail sales figures, consumer spending played a big role." ING economist James Knightley added that the higher estimate of GDP will "boost optimism on the economy". Although this is some modest growth it is still the fact that not enough constant capital dead labour in affect has not been destroyed to restore the rate of profit. As such the system is bound to hit trouble in the near future. As we know the capitalist system is not based on meeting so called demand in fact workers can never buy back what they create as this would mean the system wouldn’t be capitalist at all in fact. This is a crisis of profitability with the under lying crisis being caused by the law of the tendency of the rate of profit to fall which Karl Marx brilliantly described many years ago in his works on das capital in the 19th century. For the capitalist system to come out of recession a certain amount of constant capital needs to be destroyed to create space for new modes of production to sprout. The reason the recovery is so sluggish is due to the organic composition of capital and the simply fact there is still far too much constant capital to variable in a ratio form anyway. We are not out of the woods yet and any capitalist polititian calling this a real recovery should hold fire. Certainly in the UK much of this short term growth can be put down to the laying off of workers and the driving down of the surplus workers receive their wages in other wods increasing profits as a result. Capitalism is a system which invests for profits not to meet need so calling this a crisis of under consumption I don’t think is right as capitalism has never been about meeting the working class’s needs not now not ever. Understanding Marx’s 3rd law of capitalist motion is key to understanding that the system cannot be reformed or made to work for us. It simply must be replaced with a system planned to meet the mass’s needs before profits are even considered which under socialism they will become less and less relevant.