Is Britain's Recovery Too Good To Be True?

Tyler Durden's picture

There was more good news for the UK economy this morning; the unemployment rate dropped to 7.1% during the three months to December - the biggest ever quarterly increase in employment. This follows the IMF this week raising its (admittedkly terrible track record-based) forecast for the UK economy; it now expects it to grow 2.4% this year which is faster than any other major European economy. Nick Beecroft, Chairman of Saxo Capital Markets UK, is “optimistic” about Britain’s recovery, but has three concerns...

1. The recovery is too dependent on consumer spending. Nick says that in order to feel "really" comfortable about the recovery, he would like to see growth in business investment ans well as consumer spending.

2. The pound is too strong. Nick says sterling, which is at a five year hjigh against the dollar, is getting too strong for the sake of the recovery. The Bank of England is now starting to get concerned about it too. Nick warns there could even be more strength to come, unless we see an adaptation of forward guidance.

Furthermore, as Bloomberg notes, the pound, despite all the rhetoric from the Bank of England, is now almost 2% (on a trade-weighted basis) higher than when the Bank of England said last month that further gains would endanger the economy.

3. Bank of England could lose its credibility. Nick is worried there is now a risk of credibility for BoE Governor Mark Carney. If he wants to keep rates lower but keep the threshold at 7 percent, people may start to ask what value it actually has.

The Bank of England has said it will consider increasing interest rates from the current record low of 0.5 percent when the unemployment rate falls below 7 percent.


Source: Saxo Bank

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Cunnial's picture

Heavens above I would nail that asian number into next week...

LetThemEatRand's picture

Nick Beecroft, is that you?  I thought you looked a little distracted during the piece.

Occident Mortal's picture

According to the ONS the fastest growing categories (quarter on quarter) include:


1). +3.8% - Water supply, sewerage etc.

2). +2.5% - Construction

3). +1.4% - Agriculture, forestry & Fishing

4). +1.3% - Distribution, hotels & restaurants

5). +1.0% - Business services & finance

6). +0.9% - Manufacturing

7). +0.4% - Mining and quarrying

8). +0.3% - government & other services

9). +0.2% - Transport, storage & communication


That looks like the kind of recovery that the UK would want. Not dependent on Government largese or ballooning financial paper shufflers.


Also where does this guy see over dependence on consumer spending??? Water Supply? Sewarage? Construction? Agriculture? Forestry?

Come on pal, get a clue.

Occident Mortal's picture

Our focus is on supplying the four major pilars of capitalism...


Drugs, arms, integrated petroleum and banks.


Rather than confuse our trade partners we like to offer a sequence of services.


1st we turn up with arms, you will need our tanks to fight the crazy guys next door (who we gave a tonne of tanks to just last week).

2nd we turn up looking for oil (you better hope you don't have any).

3rd our banks will turn up to bamboozle your government into signing all kinds of incomprehensible contracts, so that we can channel away your future tax revenue and reduce your risk. Need some swaps? Too much ink in your pen? We can help.

4th our drug companies will turn up, to diagnose everyone as sick. 


Yup, we're killing it.

TruthInSunshine's picture

The U.S. is approximately 35 years behind Britain, following in her footsteps, in terms of devolution of living standards for the mass majority, restriction on liberties, an economy gutted of real industry, and massive (much higher than at present levels) rates of red tape, taxation, fees & an entire litany of other government heavy-handed intrusions.

If one wants to accurately predict what the U.S. will look like in 35 to 40 years, look no further than present day Britain, where the middle class has been eviscerated, and the 1/2% who work in the financial services industry/banking live in London, and enjoy great food, protection, entertainment options, magnificent housing (even if vertical), because they have the financial means to afford the astronomical costs of living there.

The U.S. has New York as it's London, and the rest of the nation will live like relative paupers, with an eviscerated middle class and huge FSA.

BigJim's picture

I'd say the USA is still ahead of the UK in terms of outright police-state fascism. The British are less hurrah for our men in uniform, protecting our way of life! than the yanks. More Brits have a nuanced view of the law, terrorism,  of Muslim grievances, of the costs (and ultimate failure) of empire.

People rarely fly the UK flag from their homes or businesses, either. In the States, Old Glory is just everywhere. After you've been away for a while and come back you realise just how fucking creepy it all is.

Tinky's picture

I rarely disagree with you, but this is an exception. I'd argue that the two, in terms of a timeline, are much, much closer together than that. I'd also suggest that the U.K.'s proximity to Europe will help it (in various ways) as conditions around the world deteriorate.

CrimsonAvenger's picture

I think we're looking at actual workforce shortages in the UK - why else would they have to hire lingerie models as news commentators?

Hippocratic Oaf's picture

They hit the PC button just right.....not too Asian, maybe some negro and white.

Not too British of an accent. that's where we're headed.

Headbanger's picture

She's not Asian:

But I'd probably have a dozen kids with her around the house!

Sudden Debt's picture

she looks like a young miss piggy with black hair...

The.Harmless.Who's picture


You might have beaten to me to it by posting about your desires, but I tell you a couple of things right now: 


1.  There's a queue forming (with the same thoughts you have)


2. Somewhere out there, there's probably a bloke who's bored of ploughing this talking head. 


Now, with that out of the way, can I just say that being in the UK (London even!), this so-called recovery is a phoney.  Like the US, the shopping centres (Malls for our atlantic cousins), are full of "Browsers" - this from a nation of shop-keepers.


Debt (oh, the number of ads for 4000% APR on the TV are rampant) is out of control.  Property speculation is rife, grownups are living at home or sharing with others - unable to buy. 


So, why the optimism in the stats?  Well, the masters of spin are born here for a start, and we love zero-contracts.  


What else can I think of? Oh! the service industry. Someone has to serve the elites, and clean up after them. Furthermore, being permanent members of the UN, our arms industry brings home the bacon.  And lastly, but not least, we have the "City" - the biggest casino around.  


Massive boost to Sterling right there. 


Damn it, in hindsight, perhaps it was better to think about ploughing this chick instead of thinking about the state of the UK. 



A Nanny Moose's picture

2. Somewhere out there, there's probably a bloke who's bored of ploughing this talking head.

It's nothing a little duct tape couldn't fix.

hugovanderbubble's picture

Saxo Bank is right,


UK is afreaking bubble, specially in Equities and Real Estate.

Caviar Emptor's picture

UK economy even more financialized than USA. Re-bubbling banks is a matter of official money printing...errr...policy. Real estate like in US mostly purchased as investment, and a good deal of that is foreign oligarchs laundering...errr....parking cash. Nice recovery brothers

disabledvet's picture

the USA...which to my knowledge HAD a reserve currency going into QE...didn't "do QE" because "we had this huge jobs boom right around the corner." My understanding on the events of 2008 are thus: "we panicked like mofo's and went cryin' to our mama" this case "The Federal Government." In short..."this whole free market capitalism thing is really a total bunch of bullshit." The "joke" of course is that "no one told Ben Bernanke" and he proceeded with a policy where "the money people pay." This was called "QE"../and it involved such a mass of Bullshitski only Wall Street would be enamored with. It drove down demand, annihilated taxpayers, destroyed Governments and created a permanent underclass. "And this was considered great news." And why not! When the whole thing is a scam anyways dependent on a taxpayer earning "less than the minimum wage" with "benefits that in fact turned out not to exist"...nay, veerily...what's not to LOVE! Of course there does seem to be some confusion as to why ratings at CNBC remain at "perma-lows." (yes...I still listen in. the irony is truly wanton...and somehow to my liking.) but whilst Sleeping Beauty awaits her Prince isn't the question "if all is well why exit?" I just can't get out of my head a little voice saying "all is not well. All is bad actually."

Max Damage's picture

Am in the UK construction sector for housing and our sales are strong. Many seem to believe we are over the worst. I don't as we all know the UK is bankrupt along with most western nations and this recovery will be fleeting. Debt will come back to the fore sooner or later. Only this time the debts are higher, and the governments have no bail out room left

Winston Churchill's picture

I have a very old friend who is a small developer in the UK.

He says he cannot raise finance at any rate to build out his land bank.

You must be much closer to the money spigot.

Max Damage's picture

We sell chemicals needed to make PVC windows, gutters, pipe, etc, etc. So yes we are. Business is strong but we have took market share with good products. The market itself has fell 20% since 2007 for our products, but we have been quick and good at seizing oppertunities. Those who have survived the last few years are doing ok. Others either died or are in a mess now. 

But as said above I think this is only fleeting as the macro problems are bigger than they ever were now

BigJim's picture

UK energy prices are higher than the US, the housing stock is a lot older, so there's more of an incentive (and market) to upgrade to double-glazing.

XAU XAG's picture

@Max Damage


nail meets hammer!

IridiumRebel's picture
Is America's Recovery Too Good To Be True? Is Belgium's Recovery Too Good To Be True? Is France's Recovery Too Good To Be True? Is Spain's Recovery Too Good To Be True? Is Italy's Recovery Too Good To Be True? Is THE WEST's Recovery Too Good To Be True?


Nex's picture

Scotland referendum about independence. Same for Spain and Catalonya.

Stoploss's picture

Been real quiet over there for the last few months.



Dat not good..

dildo o flaherty's picture

I'd have more trust in a wheelbarrow full of shite than the manure that Nick Beecroft talks.

madbraz's picture

Wow, the top 0.01% of the world congregates in one spot (Davos) to define how miserable the bottom 90% will be and how much their children will suffer based on their "findings".

An avalanche would do the trick.


BigJim's picture

All it takes is for one local air force praetorian to decide he's sick of this shit, and drops a couple of hellfires on the hotel. That would do it.

I wonder if the local military remove all the ordnance from their fighters, bombers and drones for the duration of these events (like I've heard US soldiers are instructed to divest themselves of their bullets when Zero comes to visit)?

JustObserving's picture

Isn't the US official unemployment 6.7%? Shadowstats says it is 23%.  And here is someone who claims it is 37.2% and the misery index is the worst in 40 years:

Don't believe the happy talk coming out of the White House, Federal Reserve and Treasury Department when it comes to the realunemployment rate and the true “Misery Index.” Because, according to an influential Wall Street advisor, the figures are a fraud.

In a memo to clients provided to Secrets, David John Marotta calculates the actual unemployment rate of those not working at a sky-high 37.2 percent, not the 6.7 percent advertised by the Fed, and the Misery Index at over 14, not the 8 claimed by the government.

gwar5's picture

Read that interesting report yesterday, but I still like Shadowstats as the gold standard of reality because Williams has doner it for years and uses the same official methodology used in 1990 and 1980, so it's possible to compare apples to apples. 


Unemployment could be higher if take into account hidden job losses ---- but employment could also be a little lower if one could track jobs being performed off the books for cash. Net-net, I go with Shadowstats.

Either way, there are no jobs and we are in a Depression.




disabledvet's picture

yeah...perrrty much. "we're exiting." It does truly beg the question "what the hell is everyone else doing?"

BigJim's picture

Yeah, I'd be interested to know the 'shadowstats' figures for unemployment in the UK... and the labour participation rate, which is the big 'tell' for the US.

And the average number of hours worked per citizen, so part-time labour is accounted for too.

youngman's picture

They have a lot of jobs moving all that gold and silver other news..did you see where Nigel Farge was hit on the head by some

disabledvet's picture

the true meaning of to laugh and behold.

Reformed Sheep's picture

There seems to be a bit of misguided optimism here, with the incumbent moron politicians already gleefully cutting up the land into potential fracking zones that can be sold/leased to foreign energy companies to "lower our energy cost and increase our energy independence and provide thousands of jobs"... No mention of how quickly production drops off a cliff with these sites, or the potential to royally fuck up our water supply. Oh never mind, we can always just start buying water from Nestle, and there will be plenty of environmental clean-up jobs in the post-fracking era...


XAU XAG's picture

@Reformed Sheep

On the fracking .gov just see £ sighns.........

Guess we will pay alot for this folly

I laugh because we will prob frack scotland away from England and it will cause so many probs, we are a small Isle not the US...........fracking will end in tears!

BigJim's picture

WIth their weather, the last thing the Brits need to worry about is their water supply.

Racer's picture

They are being extremely draconian on people on unemployment benefits and forcing them into "jobs" that have zero hour contracts or have to travel 90mins each way to work, which in the UK is extremely expensive because of high fuel and a transport system that is overcrowded and expensive.

Some recovery!

XAU XAG's picture's all about numbers


High fuel costs from over taxation on fuel

10 years ago, if you was a high rate tax payer for every £100 of fuel you only actually got £10 worth due to taxes.......they have increased the vat since

Dr. Engali's picture

"Nick is worried there is now a risk of credibility for BoE Governor Mark Carney. If he wants to keep rates lower but keep the threshold at 7 percent, people may start to ask what value it actually has".


If the Bernank has shown us anything, it's that the goal posts can be moved to where ever they want them to be.

GrinandBearit's picture

Recovery? He wants consumer spending and housing market to drive it? - LOL!

The MSM lies and propaganda is non-stop.

Where does the MSM go to find these so-called "reporters"?... modeling agencies?

buzzsaw99's picture

don't knock the move toward young fuckables. would you rather look at buttaroma and herera reading the latest propaganda?

Josephine29's picture

I was reading earlier that this is something which is very familiar for the UK economy.


Two familiar problems arise

This mini-boom brings with it two very familiar themes of UK economic history. Firstly there is our chronic trade problem.

Net trade had reduced growth in Q3.

Apart from being yet another forecasting error as the Bank of England had been optimistic for this we see that the UK is in danger of facing another trade constraint as domestic demand booms and sucks in imports.

This is usually combined with something which confirms its instability and here it is.

the growth in household spending had been associated with a fall in the saving ratio from almost 8% to just over 5% of household income.

If we look at the UK mini-boom from this background I suggest this from Status Quo as a musical accompanyment.

Again again again again, again again again again
Why don’t you do it, why don’t you do it again


So the "recovery" is just in time for a general election and no doubt the usual bust will come after it!

XAU XAG's picture



And don't forget the good old credit cards!


And yes all good for the elections.........unless interest rates HAVE to rise then it's watch out below

MFLTucson's picture

If they are using the same fraudulent accounting as the US, then yes, it is too good to be true

Sean7k's picture

What happens when the chinese stop shopping and investing all their liquidity outside china? What happens when all those loans get called in and the money has disappeared overseas?  What happens when the yuan collapses? If you aren't paying attention to china's loan problems and emigrating wealth class- you won't see it coming.

Oh, and yeah, that was only posted to show off the Swedish-Indonesian chick. Well done Tylers.

gwar5's picture

If the Brit recovery were real they wouldn't be offering bonuses to doctors to kill off the elderly. 


writingsonthewall's picture



The rise in consumer spending is due to buy-to-let landlords 'dressing' their bubble flats in anticipation of the massive rents they have been told by estate agents they can expect on their property.


The unemployment rate is only falling due to 2 things:

1) Part time jobs and masses of new 'self unemployed' - where you register as self employed but you don't actually do any work!

2) Benefit squeezes which is forcing people to not register as unemployed (as you get no money anyway) - but the number of 'economically inactive' people are rising.


I myself haven't needed to work for 1 1/2 years now - but I'm still counted as 'employed'


Nick Beecroft is a fool - he's targeting symptoms as causes. Tax receipts are what matter - and they are falling year on year.


There is NO recovery while interest rates remain at a HISTORIC LOW. Why don't the lamestream media and echo chambers like Beecrfot EVER point this out.

It's like you saying your car is 'fixed' because it's 'moving.......on the back of a tow truck'

The housing bubble in the UK is well out of control already - you can tell this because now the lamestream media are talking about a 'possible bubble' and you know when they mention it - it's well underway!


Buy to letlandlords are now applauding sub 5% yields on their property - considering the cheapest BTL mortgage out there is aout 4% - then it doesn't demonstrate they have a handle on the maths.


A raise of rates will push all these BTL fools into bankruptcy - or they will try to jack up rental rates - which will end in a similar catastrophe.


Still - low rates keep the sheepeople happy - and thanks to my bet AGAINST the BoE in 2008 - I am now DEBT FREE and I have a lot of gold for backup when the currency finally loses all credibility.


So the longer the fools believe we're in recovery (when we're not) - the better for me I suppose.

6 years of historic low interest rates - only a jackass would even mention the word recovery in this context!