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"The losses of the two London airports increased 8% to £211.5bn" - wow! how did they manage that?
I think the new 1st quarter growth figures which are unimpressive in themselves need to be placed in the context of Robert's well timed blog that reflects more the reality of the UK economy 2011.

ARM - £51 billion profits in three months Mr Peston. That is really some going.

Mr Peston is this figure correct -"The losses of the two London airports increased 8% to £211.5bn". Would a loss of £211.5 billion be sustainable on "regulated asset base of £13bn"

Adding to these company results we now also have our economic growth or GDP figures for the first quarter of 2011. As they show that we have had no growth for six months in the UK it is hardly inspiring and is expressed well here.

"This brings me back to a theme of mine for the UK which is stagflation. How do we define it? No growth since the third quarter of 2010 and an official inflation rate which at 4% is twice its target seems to do the job. The first part of the sentence gives us the stag and the second the flation.

If we put to one side my view that the UK needs a change of economic policy and look at the consensus view of our Monetary Policy Committee it is apparent that they are in danger of not only failing on my terms but also failing on their own. In truth we can see that they have really targeted economic growth in the UK and the result of this has been no growth at all over the past six months."


It looks like stagflation for us does it not?

RP wrote:
ARM, the world-leading designer of electronic chips for smartphones, tablets and consumer devices, saw revenues rise 29% in the first three months of the year and profits increase 35% (to £51bn).

"the likes of Apple and L&G.."

- L&G is an insurance company - presumably meant LG

Quibbling about the difference between millions and billions is just petty. Mr Peston is a journalist and doesn't need to report to that level of accuracy.

Bit of sloppy, sensationalist reporting, BAA results should be in £m not £b.

Also they made EBITDA of £200m therefore losses are not operating losses, but more than likely due to the costs of the financing. £307m cost of interest and losses on "financial instruments". Some of the interest is also going up the chain within the group.

Banks can recover and help the economy if those operating in the UK were forced to become CIC (Community Interest Companies): companies established for community purposes where the assets and profits are dedicated to those purposes - not bonuses or dividends!

So there is good news on the Economy but not surprisingly Mr Preston and the left wing Miliband supporting Â鶹¹ÙÍøÊ×Ò³Èë¿Ú will still look for negatives. The Bias is so blatant. I am surprised they can bring themselves to support on the Royal Weddind.

Are Pestons numerical & reporting facts skills falling quicker than a hippo doing a bungee jump, or quicker than a ghost writer can say BOO.

A £211 BILLION loss would surely make front page headlines and would need a bailout bigger than some of the banks, MAYBE they could borrow some of ARMs tiny 3 months £51 BILLION profit!!!!


I am finding it harder & harder to trust any information & figures reported in UK media.

Just the difference/variance in numbers of so much reported number "facts" between newspapers & TV channels is staggering.

Personally, I now take the whole news media with a pinch of salt and trust it less than I'd trust a dingo employed as a babysitter!!!

I think Robert is having problems with understanding millions and billions

All looks very flat, and thats before the spending cutbacks really kick in. Is it a case of the calm before the storm and Ireland here we come? or will we set a different trend. And lets not forget to sovereign debt crisis that is still pushing up yields in Spain. The clock is still ticking there.

Only 0.5% growth for GDP - we have bigger problems ahead!

Robert,

You seem to suggest that the future of Britain (and of Europe, if you don't mind - my paying corporate tax in Britain makes me sensitive to British issues but I am French) lays basically in re-balancing from the financial industry to boffin-powered companies like ARM. It seems to me to implicitly suggest that what we could generically describe as "the West" should exclusively look for its salvation in high-worth jobs and companies.
That seems to me wrong on two accounts. For one thing, many people in "the West" lack either the capacity or the training to take high-worth jobs. Someone who would made an excellent foreman or a brilliant technician isn't necessarily suited to design chips. The second point is that you have some very bright boffins elsewhere than in the West. It has long been known of India, although there has been until now an obvious tendency of their bright minds to move to the West (via Singapore, usually).
But it is increasingly obvious in China too. In my particular trade, IT, I can tell you that the Chinese are increasingly present on web forums, and that they have nothing to envy to their Western colleagues (except possibly wages). And the same could be said of other parts of the world. The likes of ARM will very soon feel the heat of increased competition, which isn't necessarily a bad thing. But my point is that betting the house on the tertiary sector exclusively is extremely risky and doesn't make for a balanced economy.

What is the GDP number without the comedy made-up contruction numbers? They are all over the place Quarter to Quarter, and are randomly down a lot this time, which doesn't seem real.

Underlying trends are grounds for cautious optimism but we will take years to get over the mega debt bubble of the Labour years. Austerity is here to stay people.

At least your update proves we do read your blogs carefully!

Leaving aside Robert's inability to distinguish between millions and billions, I can't see what conclusions we're supposed to draw from these results other than that the world is still turning, companies are still providing goods and services and are making money according to how well they're trading. The sky hasn't fallen in and no amount of headless chicken impersonations are going to help. Given how long it is going to take for us to crawl out of the recession I suggest Robert comes back in about a years time and gives us a more accurate update then. In the meantime creating inaccurate pieces of writing without any analysis doesn't add much to our sum of knowledge. Must try harder Robert.

This 'confusion' with millions and billions is precisely why the previous government used to get away with announcing some 200 million quid 'initiative' to (say) buy laptops for the poor and then skate over a projected 180bn quid annual deficit.

Well, if they're spending 200 summat on computers then 180 summat can't be that big a deal.

No wonder Labour destroyed the economy when even the Â鶹¹ÙÍøÊ×Ò³Èë¿Ú's financial journalists will faithfully proofcopy a 200bn plus quid quarterly 'loss' from a single company and not realise the manifest error. And, lest we think it a one-off oversight, fail to spot a 50bn quid profit as unremarkable too.

what's a few noughts amongst friends.billions, millions or even trillions. We seem to have accepted that a Bln is no longer a "million million" but only a thousand million; and a trillion is no longer a "billlion billion" but a mere million billion. So that makes a pound only a penny!

The UK economy, like that of the US, remains in absolute turmoil and is sustained only by confidence in its bond markets. I would advise those interested to watch Fareed Zakaria's interview with James Baker. This artificial confidence is a mirage created by politicians and driven by the media, both conspiring to avoid telling us the gravity of our collective predicament. Mr Peston knows all about using bluster and fluff to hide core inadequacy.

£51m quarterly profits from ARM.

Great - the tax on that will pay the interest on the national debt for the next 3 or 4 hours!

Therefore, we need another 750 more of them just keep paying for the debt interest alone. And Labour still want to keep on spending!



PS - When did Labour drop the "New" bit? I guess it's redundant now everyone can see that they acted just like all the other "Old" Labour governments and went on a crippling tax and spend fest.

Bit of a problem with the words as well as the numbers; "... the risks and costs of extracting energy are on a secular rising trend ...". I always knew those pesky risks and costs were unbelievers.

This really is a mad crazy world or am I just missing something? I look around me and see people that I know very well driving in flash cars, purchasing very expensive houses and buying weekly groceries that excede hundreds of pounds in cost. I know for a fact that my income does exceed most of them but could never justify their expenditure. However I drive a very old (but reliable) car, have cleared any loans / credit cards. I still have a mortgage though and will only spend on luxury goods if the money is there. I may be very naive to the system, but I see it as totally unsustainable, fragile house of cards ripe for collapse? Dare I say the Emporer has no clothes? The financial industry certainly will not....

The problem is GDP figures can easily be made to look a lot nicer than they actually are. GDP is measured in £’s, so as more liquidity is pumped into the system, the economy shows GDP growth while sterling takes a battering, which means the nation gets poorer as ‘things’ cost more.

For GDP figures to mean anything, it has to be measured by something with the same value all round the world, for example gold. Then it’s becomes a measurement of productivity and money velocity rather than a measurement of currency debasement. Using this standard we are still in a recession, and that’s why for most people it still feels like one.

The only way to get real growth is to restructure the economy and start producing again. The only way this can be done is by massively reducing taxes and government spending, instead we are diverting a HUGE amount of resources to social welfare and government, which create no value and is slowly eroding the nations competitiveness (and wealth).

Headline statistics are very dangerous indeed!

The corporate (and Central Bank) story behind GDP is meant to confuse and confound; so, if you feel that way, you're probably normal.
To unconfuse
1. Forget all about supply & demand; so much manipulation has happened that you cannot depend on bottom line supply & demand.
e.g. What if QE3 happens: some $2.5 trillion to buy Treasuries, Agencies, and toxic waste. China has indicated that they won’t be purchasers in the future either. Will the oil-producing Gulf States? The three countries make up 45% of Treasury purchases. Okay, now tell me how you measure GDP?
Then there is high unemployment (Never reported using the same criteria country-by-country). There is also the question of US debt, along with wars in the Middle East and North Africa.
Further, how can the UK hope to calculate anything like an accurate GDP when the United States is circling the drain?
US and world markets are being subjected to non-stop manipulation. This corruption has destroyed all free markets (and no one has ended up in prison!).
Take away the military complex, trading platforms and subsidies, etc. and then show me your GDP.
Wealth destruction is still in progress and only the chosen get to retain their ill-gotten riches. The Fed’s balance sheet over the next 1-1/2 years should reach over $5 trillion. Can you even picture that?
Real interest rates will creep (up), toxic securitized mortgage bonds will fall (lower), housing market will sinks to new lows...and by the way what do you think will be your GDP?
Warren Buffett, like the Chinese is dumping US dollars. He's busy buying companies in Asia & India. Even PIMCO, as we all now know, has sold US Treasuries, in fact shorted them in anticipation of higher interest rates. I think the Treasury and the Fed want the dollar lower in order to be competitive, but if there going to allow this: they will also have to end free trade, off shoring and outsourcing. How did you say this would affect your GDP?
How do you develop any monetary policy in this economic cesspool? How can any sane analyst or economist expect better than 1 - 2% growth this year with QE2 (impacting the world, especially commodity prices)?

The sad truth of these numbers, with the possible exception of ARM is that all these companies could make more profit/less loss by reducing the pay of the under performing senior managers. At the same time reducing total employees would also be easier as many particularly in BAA and Barclays serve no valuable purpose.

Robert is right that we need both manufacturing and Brain power in this country. sadly, government policy over the last 5 decades has mitiigated against both to the detriment of all.

Perhaps to help RP and us all remember the difference between millions, billions, trillions and quadrillions we should make a bigger difference in their spelling and how they sound.

For example a million, a bigbad, a zeriouzus, a stagstumpo.

So Arm have made £51million in a quarter, BP's profits in the quarter fell a fraction to £5.5bigbad, the US federal budget spending is $3.83zeriouzus with a budgeted deficit on that number of $1.59zeriouzus, a US man in 2009 was charged $23stagstumpo on his credit card for a packet of cigarettes.

Now Mr Peston won't make any more mistakes and we'll all have a better idea when everyone is talking about a really big number.

Barclays et al keep up this story that business isn't asking to borrow. On this occasion I don't think they are telling us lies.
Of course, if you don't want to lend you make your interest rates incredibly, even ursurously high, charge massive arrangement and investigation fees and put a pile of nasty extra requirements on. This is exactly what the banks have done.
No sensible business man is going to borrow money at the current interest rates and fees when the economy - and therefore his business - is growing at such a very low rate (and will probably once again contract as the pain of tax hikes and public sector cuts is felt).

The government could do a lot to fix this - but because it is a pathetic mess of a government, no better or worse than its predecessor - they won't.

What they need to do is simple...
a) Use the banks we own to provide cheap and affordable business loans at around the BofE base rate - no more than 1%. This will be better than providing 'qe' which just went straight to the pockets of the rich and then into commodotie speculation.

b) Introduce into the purchasing process for all government (local, central, police, MOD, ambulance, NHS) requirements to assess the environmental cost of shipping product, the cost of lost UK taxes and employment if purchasing overseas and the strategic cost of not being able to make tanks, planes, computers, bullets, clothing, food, cars, steel.... If these costs and losses to the UK economy were taken into account we would see the police in Range Rovers, Jaguars, Fords and other UK produced cars - not BMW, Mercedes, Porche, Renault, Volvo as we do at the moment. We would see army uniforms made in the UK not China. RAF drone aircraft made and controlled in the UK (and free from US control), NHS computer systems written and tested in the UK not India, and something less than the 30% of the working age population not working (we really do have 30% of those who should be working and earning money sat at home taking benefits - just check the ONS).

"Now part of the drag on Britain's recovery is the burden of debt on households and the impact of rising commodity prices on consumers' spending power."

There is no "drive" in the UK. People don't seem to be interested in improving themselves (in every sense). I truly fear that the UK is on a downward spiral.

What we are getting is a nasty combination of low-to-no growth, higher than desired inflation and swingeing cuts that will all too often increase cost at an individual level when it would be both cheaper and fairer to meet these needs through properly funded universal services.

Can someone explain to Cameron and Osbourne the difference between running a country and a corner shop before it's too late?

I come on here every now and again just to check the UK is still going bust and the world is going to end - sometimes when I don't come on this blog and the sun is shining and I have money in my back pocket, the tee booked for tonight' dinner with loved ones and I've just tried to buy my Olympics tickets I have a tendency to forget that everything is as desperate as it is...................

> Here's the painful part: we may need banks to become smaller, but we all suffer if
> in the process they starve job-creating businesses of vital finance.

We already know that large banks starved job-creating businesses of vital finance when they went bust themselves (en masse) way back in 2007/2008. And they've been causing chaos everywhere in the world ever since. Look at Ireland, Portugal, the US, Greece and the UK.

Nope - there is no downside in chopping those greedy banks down to size, only a chance of upside. That means it's a no-brainer – break them up, for the sake of our kids.

> Sorry for my brain stall. I've probably been dealing in billions a little too often
> recently - due to the magnitude of our recent financial crisis.

Don't worry about it - blame the bankers, like I do!

I am told that if the stuff we are throwing at Libya is "British made" it makes a "contribution" to our GDP.

Is that what has stopped going into recession?

Afternoon Robert,
ah the pursuit of that pesky GDP nirvana!
I wrote in January that anecdotal evidence of petrol station queues and bank queues that I had not witnessed for some time must mean that the populace was spending more and thus the GDP would increase.
However when you take a look at the bigger picture, in the USA they are in a worse position than they were in 2008 (according to S&P) despite having thrown large amounts of Government dollars at the problem to enrich their multi-millionaires (the job creators). China is battling like crazy to rein in their bank lending which is fuelling rampant inflation and the default rate is shooting up. The EU is seriously worried about inflation too and will be raising the bank rate to try and cool down wage demands.
Now in our sleepy UK, we see no such problems. I wonder why not.
As a previous blogger pointed out we are just now entering the start of the Government cut backs in benefits and Government employees (economic madness).
Our housing market is being largely supported by cash buyers (presumably investing to rent out) because there is no other perceived mechanism to profit from one's savings.
Our banks have greater liabilities than they had in 2008 so the too big to fail problem has actually got worse (no solution there then). Banks are increasing their notional profits by reducing the monies set aside to cover bad debts (smoke and mirrors).
Politicians are funny chaps. They tell you that if you follow their instructions, then all will be well. When it all comes crashing down around their ears, they tell you it was world forces beyond their control wot caused it, or that they had been misled.
My view is that we are about to repeat the experiment of Greece and Ireland and within a year we will all be worse off (with nothing to show for the pain).
Perhaps if we stopped trying to solve the world's problems and concentrated solely on our own problems we might achieve something and turn this disasterous situation around.
The GDP question is only of interest to the BOE and the Government to justify their poorly thought out policies.

Large companies are broadly sitting on cash mountains as the Ernst & Young report showed recently...the problem is that with the austerian firmly slamming on the economic brakes globally we can't rely on trade aka foreign net saving desires to fund sme and household net saving desires, as shown by increases in household borrowing despite Osborne claiming he'd decrease both at the same time, something it's only possible to do by increasing net exports to the same degree.

@ 34. At 15:26pm 27th Apr 2011, jeff lampert wrote:

> I am told that if the stuff we are throwing at Libya is "British made" it makes
> a "contribution" to our GDP. Is that what has stopped going into recession?

Perhaps. We're at perpetual war with no clear end conditions.

GDP up 0.5% - much celebrating - get the bunting out and lets have a party - the growth explosion is on its way - hurray!
GDP down 0.5% - much gnashing of teeth - oh woe is me, we're doomed, doomed, a nation of double dippers - sob, sob, sob.

Pathetic - its the media trying to make a story, its the bankers etc trying to create trends they can exploit, its the estate agents trying to generate some interet in housing.

The reality is that there is no growth - we are flatlining until the govt reduces spending and does actually cut something at which point our GDP will shrink as it is so reliant on the public sector.

Too much talk of the statistics and not enough discussion of the root causes and what needs done to resolve the real issues.

The GDP challenge.

The consumer is getting out into The High Street, but is tame about spending. The Banks either aren't lending or just can't, because nobody wants their money and company profits are falling, (except for ARM!) Commodity and energy prices are rocketing and the government is desperate for tax income because its debts are worse than forecast.

We need to make a dent in the unemployment figures. But it seems that's not going to happen (given the GDP and company results reporting......for quite a while anyway.)

All I wonder is, if we have really learned our lesson about the reality of debt-based growth. Even today the future is predicated on their being huge debt based growth in future - some might call it, "getting back to business pre-2008 style." Even the OBR reckons we could/should take on more debt and spend our way out of this. Which would seem to me to be quite irresponsible, given interest rates have yet to rise (inevitably causing higher numbers of defaults.)

People (consumers) are wary of a double-dip recession, the GDP figures hardly show we're out of the woods. Many consumers are now trying to do the responsible thing and get their debt-based affairs in order. Either that, or they've been up to their eyeballs in debt and, at some point in the distant past, have been debt-free and are thinking that "Debt-Free is Better!" Can't blame them.

At least interest rates won't be going up, at least not until late in the year anyway.

Not a lot is changing. That's the worrying thing.

24. At 13:15pm 27th Apr 2011, wmbm wrote:

This really is a mad crazy world or am I just missing something? I look around me and see people that I know very well driving in flash cars, purchasing very expensive houses and buying weekly groceries that excede hundreds of pounds in cost. I know for a fact that my income does exceed most of them but could never justify their expenditure. However I drive a very old (but reliable) car, have cleared any loans / credit cards. I still have a mortgage though and will only spend on luxury goods if the money is there. I may be very naive to the system, but I see it as totally unsustainable, fragile house of cards ripe for collapse? Dare I say the Emporer has no clothes? The financial industry certainly will not....

This is one of the problems of using GDP as the prime measure of the strength of the economy, If the domestic population spend money they haven't got, industry makes & sells the goods to supply them, GDP increases but as you say it's not substainable eventually the bubble will burst,
Everyone round the world wants ARM chips in their phones, which brings new money into the economy for as long as the world wants to keep updating it's phones. More development in advanced technological area, particularly in encouraging the manufacturing to be done here rather than just the R&D is the way to bring substainable growth.

Googled what Gross Domestic Product - GDP - actually means. More informed, by many sites, but no wiser as to the figures released today by the ONS of Britain's GDP.

So, will have to go by OUR FAMILY Gross Domestic Product:

FROZEN INCOME: minus more income tax, NI, Council Tax, Rising Gas and Electricity bills plus 5% VAT, telecom bills plus 20% VAT. Highest fuel taxes in Europe plus VAT at 20%. Plus MOTs and repairs PLUS 20% VAT. Food bills rising due to delivery companies passing on 20% VAT on their costs to shops AND, ultimately our shopping basket on top of the above.

Have I missed anything: please further the list if you are PAYE and can't reclaim any VAT in any way shape or form.

@splendidhashbrowns
"My view is that we are about to repeat the experiment of Greece and Ireland and within a year we will all be worse off (with nothing to show for the pain)."

You do worry us somehat. What is the problem with those two economies? They are being propped up by the central bank, and can borrow money at a fraction of what they could before. More splendid than your hash browns, surely!

I suggest the Greek experiment is still ahead. You must have heard of the 280bn Euro which rich Greek tax evaders have snuffled away in Switzerland. That is soon on its way to Greece. To pay off its country's debt.

Once that idea catches on, it will happen in other European countries. Collect all the tax evaders' money from any tax heaven in the world, and pay off the national debt. Superb idea, don't you think? Would do wonders for the UK's GDP, as everybody could buy things, instead of having to worry about paying off the national debt!

BTW MPs can claim their expenses, including VAT, even though they are public servants and not self-employed - how is that right?

@jeff lampard
"I am told that if the stuff we are throwing at Libya is "British made" it makes a "contribution" to our GDP. - Is that what has stopped going into recession? "

Not only that, it also makes a contribution to sorting out our nuclear waste.

So the best arguement is that we have flat lined for 6 months, the reality is that we are in recession and have never been out of it. Every accounting fraud, oops sorry, accounting best practice, trick has been pulled to show growth.

What growth there is, is not nationwide just London and the SE. What a desperate policy show growth in London to mask the reality of recession, fast leading to depression, elsewhere.

Goodbye the UK we will not stand for this without civil unrest. Coming soon to a place near you.

Arm don't manufacture anything? Really? Are you sure?

25. At 13:17pm 27th Apr 2011, Nat wrote:
The problem is GDP figures can easily be made to look a lot nicer than they actually are. GDP is measured in £’s, so as more liquidity is pumped into the system, the economy shows GDP growth while sterling takes a battering, which means the nation gets poorer as ‘things’ cost more.
================

You can always look for the real GDP growth figure, adjusted to inflation. Also to make it more relevant with cost of living always look for GDP PPP (purchasing power parity) figures

Youngsters without spare cash will be slowly realizing that they are part of the latest lost generation. Retirees with spare cash will be looking to see how best to hoard their booty.
And the bankers will be looking at how to keep the property market buoyant lest their investment turn to dust.

When will folk realize that the bankers have to leech off everybody else?
Do the bankers not realize that it is not in their best interest to have lost generations?
Perhaps they just don't care. They just want lost generation to get lost.

46. At 16:56pm 27th Apr 2011, Andy wrote:
Arm don't manufacture anything? Really? Are you sure?

Every cloud has a silver lining. So the price of sugar is up. We should be out celebrating in the streets. Sugar is responsible for a huge proportion of the obesity and other degenerative disease currently inflicting the world's population. More expensive sugar should be less is consume. That will equal better health and savings of billions of £s for the NHS. During World War II, there was a lot less degenerative disease due to the fact that sugar was rationed.

Can people really be as badly off as the media make out if they can still afford to spend billions on eating junk. There is plenty of money around; it's just that most people tend to waste it. We don't need more companies like ARM. What we need is to spend less. Cut out the waste and we'll all have enough money.

We are what we buy ... we can all buy ourselves out of this predicament by buying British wherever and whenever possible.

The British economy is in some ways like the Japanese economy ... at some point(s) the optimum growth for our UK ecomomy is achieved under whatever systems and operations are being used.

Exporting more means importing more because we have few natural resources and commodities... and new approach is needed ... re-balancing and re-structuring the UK economy will probably take 20 years or more when we have the right plan, strategy, operations, systems, mindset .... so far the UK has not even got started ... we will have modest growth while the INS is counting import inflation and a devalued pound as growth ... and the GBP is strengthening against the US £ and ... guess what ... The INS have concocted some growth!

Thank heavens (or more precisely our educational system or even more precisely our very best universities) we have a few 'boffins'.

Why does 'boffin' have a slightly derogatory note? I guess if they'd been really smart (or do I mean money motivated) they'd have become forex traders or something else important. That is important enough for UKGov to save them if they hit financial trouble. Forgive my well established 'bigotry against bankers' showing.....

... BUT having pumped huge amounts of money into banks and banking, we are cutting our already under funded universities and have, as ever, nothing to offer to our wealth creators.

So those parts of corporate Britain which failed to lever themselves into bankruptcy during the years of Fantasy Economics are doing fairly well. So they should, as they have been able to restructure any debt, curb their costs and now they have a government that recognises that it needs them.

Those companies that had debt laid on them by incompetent management and shareholders are probably going to go bust in the end if the banks don't help to restructure them. I hope the banks do support them because as a taxpayer I was conscripted into helping the banks out from their stupidity.

Now the question has to be where do we go from here?

Yes, we need to restructure the banks so that they serve the country rather than the country serve them. They won't like it but that is the price of failure: you get restructured and sent out to work for your living. This is the next political issue for the Coalition once they have stopped abusing each other over AV.

Then they need to find ways of regenerating the entire economy, an economy which has badly lost its way in a country where running up debt was perceived as a jolly good thing as asset values zoomed off into the blue of turbo-capitalism.

Asset values are largely coming down, the government has embarked upon a programme for balanced budgets over the next four years, consumer demand is in the doldrums and for it all to work the OBR reckons consumers will be prepared to take on even more debt. Pie in the blue beyond more like!

Sorry guys, but we are in for a lean period, bad patch or hard times. Take your pick. The money tree has lost all its leaves. This will be bad for some but not too bad for most. Yet at the end, if the government is prepared to facilitate manufacturing and banks are prepared to support such developments then we could fairly easily have another couple of ARMs in a few years time in other industrial sectors.

Mind you if the government fails to achieve this simple measure then we are all in trouble. It is time for the government to stuff politics and start finding a way to energise our economy to add value and build growth. Then we could afford all the nice things we would like to have. But first there is work to do. I suggest HMG gets on with it.

Dear Mr Peston,

I have failed to follow "what the UK economy needs if its insipid recovery is to become something a bit stronger". For example:

(i) you say "part of the drag on Britain's recovery is the burden of debt on households and the impact of rising commodity prices on consumers' spending power" so what is your policy suggestion - raising interest rates to tackle inflation or more QEing for liquidity?
(ii) you say "ARM's success is in exploiting the grey matter of a few boffins: it manufactures nothing" - so more or less higher education, IP protection, venture capitalist tax relief ...?
(iii) you say "world sugar prices are at a 30-year high and that there has been a sugar shortage in Europe" - so do we plant sugar beat, synthesise sweetners or just get fitter (have you looked at the ingredients in breakfast cereals) and work more efficiently?
(iv) you say "the fundamental BP story is that the risks and costs of extracting energy are on a secular rising trend - for which we all pay a price." So do we get fitter again, less calories per person? Do we build coal power stations and restart the mines? Do we not bother with green taxes its self balancing? Do we avoid high energy manufacture?
(v) you say "The unambiguous trend is a sharp reduction in the charge of debts and investments going bad - which was 39% lower compared with a year ago and 33% down on a three-month comparison." and "Here's the painful part: we may need banks to become smaller, but we all suffer if in the process they starve job-creating businesses of vital finance." - So should rates increase to finish off the marginal businesses / encourage takeovers, allow investment in the new? Should mark-to-market cease? Should reserve requirements be delayed?
(vi) You say "perception of deserving borrowers". So what is the policy here, lend on the basis of need, risk, what? (Assuming there is still sufficient speculation to price risk).

So Mr Peston would you please unpack the idea of "insipid" further and for ignorant readers like me (or it might just be me) - spell out the policies that we (I) should be infering from your data.

Shifting from banking to boffins is not going to rescue the economy. You can't tax these companies or they just so "oh well if you do we'll go abroad". Sound familiar?

ARM already does much of its work in the USA, thats where their boffins live...

We need an economy of elves. Busy "making stuff" that people want like cars, TV's, computers, furniture etc. Creating real jobs in a real wealth creating economy. Where is the British Toyota or Intel or Boeing?

The eekonomy is flatlining which proves that the QEmpalming f£uid stuff is just what the undertaker ordered..

We are moveing from the nanny state to the [I want my ] mummy state ,only don't expect any milk of kindness from the dried up tutts plying their trade by hanging out in the sillycon valley

Economics is now just the latest branch science of taxidermics used to get the turkeys to vote for christmas

I used to work for a smartphone handset manufacturer that used ARM processors. The big joke was that the company that made the plastic handset logo got paid more per unit than the unit cost of the ARM license. Compare the profits of ARM to Apple. Apple use ARM licenses and makes stuff in China, but Apple makes huge amounts of money using technology to make thinks that people want - it injects a kind of creative value that seems to be worth many times that of the technology. So, it is more Apple's that we need and not more ARMs. Do you honestly think we can ever have a company like Apple? Would our banks ever put up money to someone with a great idea for pulling together off the shelf technology to create a product that people want?

Littlefork,

Too true. The only entities who may even have a billion pounds are a very small group of governments. I think it's just to make things sound grander/sensationalist. If the UK was truly in a 'British' billions pound's worth of debt, I'd probably just leave.

Great reporting Preston. It seems some companies are making ridiculous profits - o no, wait, you made a mistake even a school child probably wouldn't do.