One country that hasn’t needed to beat its breast too badly is Britain, where January brought more good news for Chancellor George Osborne. The revelation that UK plc grew by 0.7% in the last quarter of 2013 alone – bringing the year’s total growth to 1.9% – has lent further credibility to Mr Osborne’s claim that Britain is now one of the developed world’s fastest-growing nations.
That, of course, is still putting a positive gloss on a mixed situation. The Q4 figures from the Office for National Statistics actually represented a slight drop from the 0.8% figure for the third quarter – probably due to a disappointing 0.7% growth in manufacturing and a 0.3% contraction in construction. But services are moving ahead strongly, and retail sales over Christmas were known to have been unexpectedly healthy, even though many retailers were discounting to uncomfortable levels.
Still Room for the Sceptics
There’s also the fact that, according to ONS figures, the economy is still running at 1.3% below the first quarter of 2008 before the global crisis had properly struck. And that shadow Chancellor Ed Balls can plausibly claim that few UK householders have been feeling much benefit at a time when prices have consistently outstripped net incomes.
Nor have Balls and Miliband’s ambitions been disappointed by the state of the nation’s banks. When Royal Bank of Scotland revealed on 27th January that it had incurred an £8 billion loss during its final quarter of 2013 – bringing to £41 billion its total cost to the government since the 2008 nationalisation – it added further weight to Labour’s insistence that it intended to break up some of the Big Five ad create two new ‘challenger’ banks from the pieces. And it came as no consolation that, of that £8 billion shortfall, a full £3 billion consisted of fines imposed for market rigging and for PPI mis-selling.
As things stand, RBS is well short of the 12% capitalisation ratio required by the Basel III international banking rules – its actual ratio is probably around 8.5%. Not good.