You know how it is. Root around the back of the sofa — and up pops the £50 billion you didn’t even know you had. They must have awfully long arms, those revisionists at the Office for National Statistics. And you thought it was only the Bank of England that was in the money-creation business.
Having done over the so-called triple-dip and double-dip recessions, Britain’s finest stats monkeys are at it again. This time, they’ve come across “methodological” improvements, such as reclassifying weapons as investment, as you do — and updated the figures for EU rules on calculating GDP. They now include spending on illegal stuff, such as drugs and prostitutes — so keeping abreast of Silvio Berlusconi’s bunga-bunga parties.
The upshot is that UK GDP was a fair bit fizzier than first thought — up an average £50 billion a year between 1997 and 2012, including about £10 billion lately from illegal shenanigans. Not only that. The great recession of 2008-09 wasn’t all it was cracked up to be — a peak-to- trough fall of only 6 per cent rather than the 7.2 per cent the statisticians previously crowed about. True, that’s the worst since ONS records began in 1948, but only a touch nastier than the early 1980s downturn.
Such cheery news then? Well, not entirely — even if George Osborne was predictably chuffed. How do you get economic policy right if the official statistics are wonky? Take the brouhaha at the end of July, for example, about UK GDP finally surpassing its pre-recession peak. Now it looks as if it got there in mid-2013, just when Mark Carney, the Bank of England governor, was forward-guiding that interest rates were going nowhere for yonks. That looks even dafter now than it did then. What, too, of the productivity conundrum? Sure, the ONS says it’s still 12 per cent below its “projected path” before the downturn, but that’s down from 14 per cent — and there are further revisions to come.
Chuck in the best services PMI figures for ten months and a 14-year high for the stock market and there’s plenty of extra ammo for the two Monetary Policy Committee rebels calling for a rates hike. That’s before the latest GDP figures get tickled up, too. What’s next, you ask? Revising away the collapse of Lehman Brothers? Such a freewheeling place, the Office for Notional Statistics.
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Virgin territory
How time flies. Was it really only two years ago that a turbanned Sir Richard Branson celebrated Virgin Atlantic’s “return to Mumbai” by parading cross-legged through its “cosmopolitan” streets? Why, the India-flag-waving beardie even came up with five reasons for coming back, including “lively Chiwda Galli near Lalbaug market” and Marine Drive’s “laughter yoga groups”.
Well, it’s not been quite the chortle he hoped for, to judge by the reverse cobra the airline has just announced, with the Indian city one of four loss-making routes getting the chop. Mumbai has been losing a packet, as has Tokyo, not that Craig Kreeger, the carrier’s chief executive, is letting on how much. Still, he’s been taking a “cold, hard look” at the business, which lost £102 million in 2012 and £51 million last year.
Mr Kreeger is forecasting a profit this year and, ambitiously for a boss in a notoriously cyclical industry, “plans to grow to record levels of sustained profitability by 2018”. Promising that sort of thing looks a triumph of hope over experience — and it depends on cosying up not so much to Sir Richard but to Delta Air Lines, the American carrier that bought 49 per cent of Virgin Atlantic for a pricey $360 million in December 2012. A new daily service from Heathrow to Detroit, and extra ones to New York and Los Angeles, will put the stress on the Atlantic in the Virgin name, with Mr Kreeger confident of luring more than the present 50,000 passengers connecting from Delta flights to the carrier he runs.
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A £300 million spend, including wi-fi on all aircraft, may entice the customers, too, but it’s hard to get away from the impression that, contrary to European aviation rules, Delta is now running the show — whatever Mr Kreeger’s denials, with him emphasising that the US carrier has only three of nine board seats.
The European Commission has similar suspicions and is poking around — Sir Richard, who owns 51 per cent, has dismissed its concerns as “rubbish”. But, whatever the financial logic, a more US-focused Virgin Atlantic is a bit provocative.
alistair.osborne@thetimes.co.uk