Are we depressed yet?

Alex comments on the BBC's volte-face (here to here) on the GDP predictions and makes an interesting point: a huge proportion of the GDP is government spending (from the £175bn-ish 2009 deficit), so the real economy is doing much worse. The BBC got the pre-announced figures but those were 60 basis points too high - a bit over £8bn (two weeks' deficit) of economic activity by my reckoning.

One thing I'd add, though: despite blowing £20m of borrowed money every hour, the government still isn't spending enough to rig the GDP figures.

The implication is that the deficit would need to be about half as big again, £260bn or so, to mask the decline in wealth creation. Of course, if they were able to borrow that much, they could give £30k/year to 2.8 million people... Hey, Gordon, I think I've solved the unemployment problem! (At least until the bailiffs arrive...)

- KoW