scrubbedexpat099

http://www.bbc.co.uk/news/business-25519110

I just do not get it, too much Port after Christmas Lunch?

robin1234

Looks like they have an axe to grind ... they are anti-EU and anti-tax so surmising that UK will do well as it's arms length from Europe. (The Centre, that is, not the BBC!)

Pulaski

The prediction is based on the assumption that the euro will continue as-is, thereby shackling German to the dead weights along the Mediterranean coast. Eventually either the Germans will get sick of the arrangement, and/or the PIIGS will grasp the nettle and realise the benefits of breaking free; if they do, France will surely follow suit.

Once Germany has it's own currency, or the euro is free of the PIIGS, Britain will stand no chance of overtaking German GDP.

robin1234

Surely Germany values the geopolitical safety and security of a united Europe in which they are top dog, even if it does cost them very dear. France and Germany have done pretty well in bed together since the war ...

cranston

Its well documented that over 30% of German women are childless. The CEBR are predicting that a population decline in Germany will result in a shrinking GDP. Seems a reasonable argument to me.

scrubbedexpat099

There is actually a term for this, Physcohistory, I used to read a lot of Science Fiction as a kid.

There was also an article in the Guardian about what would have happened if Germany had won WW1.

The main difference seems to be that something in the future could possible happen.

Michael

Before anyone can make any sort of logical prediction, Europe has to start producing growth. Of the major countries in Europe, only Germany is above pre-crash levels in "GDP Constant Growth" and the Euro Area has been primarily declining for the past 2 years.

UK GDP Constant Prices

Euro Area GDP Constant Prices

Germany GDP Constant Prices

scrubbedexpat099

I have issues with GDP being anything but a tokenistic number.

There was quite a good slide show on www.storyofstuff.org.

Looking at the UK numbers, just a couple of thoughts:

If you take a straight line through the 50's and 60's then the current number looks pretty good.

The early 70's are not quite as I remember them, seems the 3 day week did not have that much of an effect?

paul32x

Personally I don't believe it. At least Germany still has a manufacturing base. In the UK we make nothing, or very little!

Michael

Then what does the title of your thread and the article that you pointed to mean?

Economic activity is measured by GDP and has been the best indicator of the wealth of a country even if it is not evenly distributed as has been the case for most developed countries over the past 30 years with most of the GDP growth going to the rich.

The 1950s and 1960s were boom years for Europe so a 2%-3% real annual GDP growth wasn't that great. Since the 1980s, a consistent 3% real GDP growth rate in a developed economy would be considered very good. It is just like China with it's high gdp growth may not seem that great to the average Chinese but that is the building blocks for the future.

steveq

...erm 12% of our national output is still manufacturing - and the % is increasing.

Michael

Don't expect it to increase too much. In the 1960s and 1970s, 25% or more was common in most developed countries and now most are around 10%-12% except Germany and Japan which are near 20%. It's difficult for developed countries to compete with low cost labor countries.

http://data.worldbank.org/indicator/NV.IND.MANF.ZS

I suspect in the future, Japan will have to also reduce it's dependency on manufacturing in order to get out of it's 20 plus year slump since many of their products compete with low cost labor countries. Even Germany will likely have to reduce it's dependency on manufacturing since eventually much of it automobile manufacturing will see strong competition from low labor cost countries especially in the export market.

paul32x

Is it? Don't believe what you read. I run a business in the UK and have done for over 20 years. I can tell you that as a result of the recession, if and when we do decide to expand again, the people we will be taking on are the people we let go years ago, and then only slowly and part time. It's going to be AT LEAST 10 or 15 years before we consider taking any new people on. Most companies, like mine, are going to make sure they have got plenty of money in the bank to weather anything in the distant future before they invest in growth. I've spoken to a number of other CEOs in my profession (legal) and they are all of the same view -- the recession still has a tight grip on the UK and isn't going to let go any time soon. Come 2015, you're more than likely to get labour in power, and their policies will do nothing to help any recovery, just encourage the UK back into a deeper recession. And don't forget their famed 2012 predictions:

http://www.cebr.com/reports/top-ten-...ions-for-2012/ --top ten predictions for 2012 include a country leaving the Euro, economic recession in Europe including the UK, a sharp fall in inflation, a successful Diamond Jubilee and a disappointing Olympics. They need to change their tea-leaves!

Michael

They were partially right.

Euro Area in Recession All Of 2012

UK Only Missed A Recession Because It Had 0% Growth In Q1

Deflation Is Now a Major Fear in the Euro Area

Deflation is much more problematic than high inflation since nobody knows how to solve the problem. Japan has been fighting deflation for 15 years and can't break the cycle. Recently the BOJ started pumping more money into the economy than the Federal Reserve is pumping into the US economy with QE3 and the PM of Japan asked companies to increase the salaries of employees to try to break that cycle. When deflation occurs, companies have a difficult time profiting, wealth is pulled out of the economy (look at the Japanese stock market and housing prices since 1989), banks become unhealthy, the standard of living and consumer confidence drops, and the national debt skyrocketed in Japan to over 230% of GDP trying to get deflation under control. This stimulus has caused the stock market to rise but most of the inflation is due to increased costs of imports including energy since the Yen has fallen in value and has not solved the core deflation problem.

Deflation In Japan Until Recent BOJ Stimulus

Japanese Stock Market Since 1989

scrubbedexpat099

One of the sad things about getting old is that there is a temptation to look back only on the positives.

I think GDP can be very misleading but I am not aware of any other reliable measure. And it may be valid comparatively.

These forecasts seem to assume that all other factors will remain the same, which seems highly unlikely.

There are likely to be events both foreseeable and not which will make events interesting.