Robert Peston, economics editor

Robert Peston Economics editor

Welcome to Peston's Picks - for my latest thoughts on the big economic events around the world making us richer or poorer

Is the UK becoming more productive?

23 April 2014
Nissan car plant worker

Well, well, well. UK productivity - the output of British workers - may be improving at long last.

That is the implication of the latest survey of business conditions by the Bank of England's agents, and it is the hope of the Bank's Monetary Policy Committee (MPC).

Why does that matter?

Well it means that pay can at long last start to rise a little bit faster, without either undermining the competitiveness of British businesses or fuelling a rise in inflation.

That said there is highly unlikely to be a sudden splurge of super generous pay awards (what is that you say? "Unless you happen to be a FTSE chief executive or a top banker". Hmmm).

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Is the UK mending fast enough?

22 April 2014

You may remember that for some years I have been highlighting research by the consultants McKinsey that shows - inter alia - how the UK has been neck and neck with Japan as the most indebted of the world's biggest economies.

Well because there has been controversy about whether the UK's current recovery is dangerously and unsustainably debt-fuelled, I asked McKinsey if it could update its analysis.

The results are striking.

They show that the indebtedness or leverage of the UK economy is falling, which most would regard as good news. Economic growth in the UK is happening at a time when the finances of households, businesses and banks are being strengthened (although, to state the obvious, the indebtedness of government continues to rise).

But this strengthening of what you might think of as the nation's balance sheet, this reduction in indebtedness, is perhaps not happening fast enough - in that the UK still has the dubious privilege of being a world leader for indebtedness, and any significant and unexpected increase in interest rates would be highly damaging.

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Has government hurt education exports?

2 April 2014
University students

One of the UK's great global competitive strengths is in education, which contributes around £10bn a year in export earnings.

Which is useful at a time when the gap between our earnings from the rest of the world, and what we pay to the rest of the world, has been widening.

So it may be mildly concerning that the number of overseas entrants to British higher education declined in 2012-13 - which is the first numerical fall in 29 years (back in 1983-1984, there were fewer than 50,000 foreigners registered in full-time education in English universities, compared with more than 300,000 today).

Between 2010-11 and 2012-13, there was a fall of 1000 - or 1% - in the number of international entrants to full-time post-graduate programmes, compared with double-digit annual growth for years and years.

The change is statistically significant.

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Will proper pay rises soon be affordable?

1 April 2014
Homer Simpson
Have we become a nation of Homer Simpsons?

Ask any economist (ie, not me - don't ever forget I am a hack) and they'll say it is impossible to have any meaningful improvement in living standards without any improvement in productivity.

Which is why it has been slightly nerve-wracking, after all those years that we've been getting poorer, that the recent economic recovery has been accompanied by only the smallest improvements in output per hour worked or output per worker.

But just perhaps there's a glimmer that you and I are beginning to generate more revenue for the same toil and graft (actually I am not sure whether I am, but I have no doubt that your efficiency is on the up).

Figures out this morning showed that in the last three months of the year, output per worker was 1.3% greater than in the same period of the previous year, and output per hour worked was 0.7% per cent higher.

A golden age?

OK this is not exactly a return to a golden age. It is important to recall that between 1998 to 2007, productivity improved at an annual rate of 2.5% per annum, fuelling economic growth at a similar tempo and rising prosperity.

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UK's recovery not debt-fuelled

31 March 2014
Money
The overall indebtedness of the UK economy should fall pretty sharply in 2014

The publication of the 2013 national accounts contained a number of positives, not least of which was an upward revision to exports, and confirmation that business investment is recovering.

Or, to put it another way, although the belated escape of the UK economy from the long years of stagnation has been too dependent, many would say, on growth in consumer spending (in the traditional British way), the recovery is not as unbalanced as some have feared.

And there is another benign trend, noted by Michael Saunders of Citi, which is that national income is at last growing faster than our debts.

Or, to put it another way, the burden of our debts is - for the first time since the great crash of 2008 - diminishing.

To be clear, those debts remain big by historic standards, and the falls are not transformative of the UK's prospects.

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When will the UK pay its way?

28 March 2014
Nissan vehicles for export waiting at Tyne docks in South Shields
The deficit on trade in goods remains eye-wateringly large

If the priority for the UK is to reduce its indebtedness - public and private sector debts - then today's balance of payments stats are not cheery.

They show the UK was a net borrower from the rest of the world of £65.7bn last year, up from £55.4bn in 2012.

Or to tell you what you already know, austerity is slowing the rate of accumulation of debts in Britain, but the absolute debt burden on Britain continues to increase.

That said, it is not all bad news. There was a cut in the trade deficit from £33.4bn in 2012 to a still high £26.6bn - thanks largely to a rise in the surplus on services by £5.9bn.

But the deficit on trade in goods remains eye-wateringly large, at £107bn - down just a fraction.

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In Ukraine: IMF Mr Nice or Nasty?

27 March 2014
Maidan Square, Kiev
The Barricades in Maidan Square, the scene of months of protests

Is tough love from the West the right economic prescription for Ukraine, as the Russian bear consumes the Crimea and appears to be salivating over the prospect of consuming rather more of that turbulent country?

Or should the International Monetary Fund and other sovereign creditors be a little less insistent that Ukrainians should put on hairshirts as a condition of receiving vital official loans?

The IMF has announced it will provide between $14bn and $18bn over two years, and believes another $10bn or so will be "unlocked" from other international financial organisations and rich countries (such as the EU and Japan).

The provision of new credit is vital. Without it, Ukraine risks not being able to service its external debts in the coming year, of defaulting, and of running out of reserves to pay for imports.

That way lies penury, for a country whose economy has been limp for years.

IMF reforms necessary

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About Robert

Robert has won numerous awards for his journalism, including Journalist of the Year, Specialist Journalist of the Year and Scoop of the Year (twice) from the Royal Television Society, Performer of the Year from the Broadcasting Press Guild, and Broadcaster of the Year and Journalist of the Year from the Wincott Foundation.

Prior to joining the BBC, he was political editor and financial editor of the Financial Times, City Editor of the Sunday Telegraph and a columnist for the New Statesman and Sunday Times.

He broadcast and published a series of influential reports about the causes and consequences of the global financial crisis.

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