GDP TO BE REVISED DOWNWARDS?

Having been in New York last week, I have now spent the last 24 hours in wonderful Copenhagen at an international project meeting, so my blogging has suffered yet again!

Catching up on the news in bed, it would seem that whilst the focus in Wales has been on the timing of a referendum on further powers (I have already given my opinion on this two years ago), there have been some disturbing statistics released on the state of the UK economy.

First of all, retailers saw the lowest sales growth in 15 years during January 2010, with UK retail sales values falling 0.7% on a like-for-like basis from January 2009, when sales had risen 1.1%.

In addition, Britain’s trade deficit increased to £7.3 billion in December 2009 - up from £6.8 billion in November - contrary to most economists, who had forecast that the deficit would fall to about £6.6 billion. Although the relative weakness of sterling did result in exports increasing by 4.5 per cent to £20.9 billion, imports rose by 5.2 per cent to £28.2 billion.

Given the fact that the economy only grew by 0.1% in quarter 4 of 2009, these worst than expected figures could result in a downward revision of GDP for the fourth quarter of 2009, meaning the country would still be in recession.

Even if we remain out of recession, the retail figures suggest that if things do not improve quickly, and there is little sign of this happening within the manufacturing sector due to the muted demand from the eurozone, then the chances are that the UK economy will slip back into negative growth during this first quarter of 2010.

The implications of that happening at a time when the Bank of England has stopped its quantitative easing measures are unthinkable, especially when government still remains reluctant to reduce public expenditure in the short term, thus threatening the credit rating, and credibility, of the UK economy.

Greece today, Portugal and Spain next week?

And the UK? The worst case scenario doesn't even bear thinking about.