David Smith: Oil drags us down - we need an energy boost
This is an interesting column by the Sunday Times economist (subscription required for the full column, PDF also provided). Here is the opening:
Long ago, in the mists of time, it was common to think about Britain's economy in two distinct ways.
There was the onshore, or non-oil, economy, and often - I am talking about three decades ago - its performance was underwhelming.
Then there was the oil economy, booming as a result of the opening up of the North Sea as one of the world's most important sources of oil and gas from the 1970s.
Combine the two and you got a healthy growth picture. Exclude oil and things were not nearly as strong.
Today, the picture is reversed. Oil is desperately weak. The non-oil economy - while subdued by normal standards - is rather stronger.
A few days ago we had another instalment of the economic puzzle. There was a big fall of 82,000 in unemployment over the latest three months and, official figures showed, a net rise in employment of 499,000 over the past 12 months.
At a time when the economy did not grow at all, according to gross domestic product (GDP) figures, employment rose by nearly half a million - to its highest ever number of 29.6m - and hours worked and vacancies both rose sharply.
Some of this puzzle will be resolved in the fullness of time by data revisions. Some of it reflects the fact that pay has been, and continues to be, very subdued: it is rising by just 1.8% annually.
Part of it, however, is to do with oil. Britain's onshore economy is doing better than its offshore economy. The decline in North Sea oil and gas output is striking.
Britain's recovery got under way in the middle of 2009. For the North Sea, however, that was the start of an accelerated decline in output. In October, North Sea production stood at 51% of its June 2009 level. The overall economy has grown, though not as much as anybody would have hoped, but North Sea output has halved.
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