Speaking at the University of London last night, Sentance argued that the official UK GDP figures published by the Office of National Statistics, which found Q3 UK GDP to be at -0.4 per cent, are in opposition with figures from the Organisation for Economic Co-operation and Development. The OECD, which Sentence says uses data from across all the major economies, paints a much more positive picture of the UK economy.
He said: “Initial [ONS] estimates are frequently revised and can be particularly unreliable close to turning points in the cycle. [OECD] indicators draw on a wide range of survey and other data that tend to be correlated with future industrial growth in major economies. It shows the UK has bounced back very sharply and has been pointing to a resumption of growth since the first half of this year.
“The more positive picture portrayed by the OECD’s leading indicator does appear to be supported by a wider body of evidence which suggests the UK economy has moved onto a recovery track and growth has resumed in the second half of this year.”
Sentance said there are four reasons why he thinks the UK is out of the recession – first, he argued that the Eurozone and the US, which are the UK’s biggest export markets, have both reported positive GDP figures over the last three months while emerging markets are still looking buoyant. He also said that Confederation of British Industry figures suggest UK business has been improving more rapidly when compared to other historical recessions.
Sentence cited the CBI’s latest consumer trends surveys, which all suggest consumer confidence is growing. He also said unemployment figures, which rocketed by 200,000 in Q2 2009 have begun to level out after an increase of just 30,000 in Q3.
He said: “Short-term economic news has been generally very positive at home and abroad and points to the beginnings of economic recovery. We should see that confirmed by the GDP figures in due course, and for that reason I would not take a negative signal from the decline recorded in the third quarter – which may change anyway as the result of data revisions.
“There is enough positive evidence elsewhere to suggest that recovery is getting underway, though it is fragile and in its early stages.”