Quarter Of Europeans At Risk Of Poverty Or Social Exclusion

The reduction of the number of people at risk of poverty or social exclusion is one of the key targets of the EU's Europe 2020 strategy yet a quarter of the population of the EU, 24.8% or 124.5m people, were at risk of one of three conditions: at risk of poverty; severley materially deprivation; or living in households with very low work intensity.

The figures are from Eurostat and are based on the EU-SILC survey. Each of the three elements contributing to being at risk of poverty or social exclusion can be looked at separately. It can be seen that 17% of the EU28 population's disposable income was below their national poverty threshold levels. In other words they were at risk of poverty after social transfers.

Severe material deprivation was experienced by 10% of the EU which means that their living conditions were severely constrained by a lack of resources. They could not pay their bills, keep the home warm of take a one week holiday away from home.

The third condition, living in households with very low work intensity was reported by 10% of population of the EU28. What it means is that 10% of the people lived in households where the adults worked less than 20% of their work potential during the past year.

Household Saving Up On Last Quarter

The quarterly national accounts version of GDP show that household saving increased from 5.9% in the first quarter of 2011 to 7.4% in Q2. The household saving ratio over the year however fell slightly from 7.8% to 7.5%. Real household income rose by 1.2% after a fall of 1.7% in quarter one. Disposable income rose by 0.1% in 2010 after an increase of 1.6% in 2009.

GDP Revised Down

GDP in volume terms in 2009 has been revised down to 5% from the 4.9% published earlier in the OIE accounts. GDP increased by 1.2% on Q1 2010. Household saving was 3.2% in Q2 compared with 5.5% in Q1 and disposable income fell by 1.6% after a rise of 0.5% in the last quarter.

GDP Falls Over The Quarter, Record Fall Over The Year

The final estimated UK GDP in volume terms increased by 0.3% on the previous quarter, the same as it was estimated in the previous estimate in May. GDP fell in volume by a record 4.9% during 2009. The household saving ratio was 6.9% and real household disposable income rose by 0.4% following a fall of 1% in the previous quarter.

GDP output by category shows that in agriculture, forestry and fisheries output fell by 2.2%. The production industries increased output by 1% over the quarter but output fell by 10.2% over 2009. Mining and quarrying output fell by 0.5% but manufacturing output rose by 1.4%. Electricity, gas and water utilities output increased by 0.4% but construction decreased by 1.6%. Services increased output by 0.3% but output in 2009 fell by 3.3% on 2008 while distribution, hotels and restaurants fell in all sub-categories and by 0.7% overall. Transport, storage and communication increased output by 0.2% due to weaker growth in land transport and post and telecommunications. Business services and finance output increased by 1% due to stronger growth in banking, renting and real estate. Government and other services reported an unchanged level of growth with output in health and social care increasing by 0.5% and other services increasing by 0.2%. Education decreased by 0.6% and public administration and defence output fell by 0.3%.

GDP can also be analysed using expenditure categories. Gross domestic expenditure incrrased by 1.2%. Household final consumption expenditure fell by 0.1% and so the volume of spending in 0.2% lower than Q1 2009. Government final consumption expenditure increased by 1.5% from 0.1% in the previous quarter. Gross fixed capital formation increased by 4.4% compared with a fall of 1.7% in the previous quarter. The increase was mainly due to an increase of 7.8% in business investment which is still 7.7% lower than Q1 2009. General government investment increased by 6.5%. In 2009 gross fixed capital formation decreased by 15% compared with 5% a year earlier. Inventories decreased by £2.2bn. The trade deficit increased to £10.4bn.

The GDP implied deflator at market prices was 2.9% above the same quarter 2009 and increased by 1.7% over the quarter 2010. GDP at market prices increased by 2.1% over the quarter but fell by 3.7% in 2009.

No Change In Income Inequality

Statistics covering the years 2008/9 suggest that income inequality remained stable during that time. The focus of the analysis published by the ONS is on the effect taxes and benefits have on disposable income. For the years covered by the study income for the top quintile (top fifth) was £73,800 on average compared with £5,000 for the bottom quintile. The top fifth received 15 times more than the bottom fifth. It is slightly down on the analysis of the years 2007/8 when it was 16 times more. When the effects of taxes and benefits are taken into consideration it is a slightly different picture. The ratio between the top and bottom is 4:1 with average final incomes of £53,900 compared with £13,600. However, the redistribution of income affects households in different ways. The effects of taxes and benefits include benefits in kind, cash benefits, direct taxes and indirect taxes which may or may not affect people individually with some 'doing better' than others such as houses with children and retired households and the cash benefits and benefits in kind like health and education.

The inequality of income can be measured by the Gini Coefficient which expresses, as a percentage, the extent of inequality where higher values indicate higher inequality. In 2008/9 the Gini Coefficient for UK was 34% for all UK households. Over the past few decades the Gini Coefficient has increased a lot from 28% in 1983 to 34 in 2008/9. It has remained almost unchanged since 2005/6. In retired households it has fallen slightly from 27 to 26%. Changes in inequality can be related to changes in the overall economy with the Gini Coefficient rising and falling during periods of growth and recession and households at the top benefiting more from growth in incomes and investments while others tend to remain stable.

GDP Figures Revised Down Again

The figure for GDP volume for the fourth quarter of 2009 has been revised again to 0.4% from 0.3% last month. The chained volume GDP index for Q4 was 100.9 and 100.4 for Q3. At current market prices the GDP index was 112.6 and in Q3 it was 111.3. In 2009 as a whole volume of GDP fell by 4.9%. Total volume of production rose by 0.4% and manufacturing output volume by 0.8%. The agricultural sector ouput fell by 1.5% compared with the previous quarter. Construction output decreased by 0.9% and services increased by 0.5%.

The household saving ratio was 7% compared with 8.4% in the last quarter. Real household disposable income fell by 1%. In terms of expenditure categories gross domestic expenditure increased by 0.8%, household final consumption increased by 0.4% and government final consumption increased by 1%. The volume of household spnding is now 2.1% lower than in 2008. Government final consumption for the year 2009 increased by by 2.2%. The GDP deflator at market prices increased by 0.7% and is 1.4% above the level it was at in 2008.

Gross fixed capital formation fell by 2.7% partly due to a fall in business investment of 4.3%. General goverment investment increased by 2.8%, existing buildings and dwellings in public corporations fell by 71.3% and in the private sector existing buildings and dwellings increased by 10.3%. Over the year as a whole gross fixed capital formation decreased by 14.9% compared with -3.5% in 2008.

GDP Down 1.9%

Preliminary estimates of GDP for the first quarter of 2009 from the Office for National Statistics on GDP by gross value added (GVA) suggest a decline of 1.9% on the last quarter compared with 1.6% the previous quarter. They also suggest it was 4.1% lower than 2008. The index for GDP at market prices was 108.1 and has been in decline for 5 successive quarters.

Production which represents about 18% of the UK economy was down 5.5%, a negative acceleration on 4.5%, driven by manufacturing. Agriculture, which now represents only 1% of the economy, actually grew by 0.3% in Q1 2009. It may only reflect the early estimated output from agriculture from DEFRA. Services, representing 75% of the UK economy, reported a fall of 1.2% drove the decline along with production and construction. It compares with a decline of 0.8% in the previous quarter. Of the total, distribution, hotels and restaurants (15% of the economy) also increased by 1.2% thanks mostly to wholesale and motor trades. Business services and finance, which represents about 30% of the economy, declined by 1.8% in Q1 2009. Five of the eight components of the category declined with 'other business services' (10% of GDP) making the biggest contribution. Government services increased by 0.5% on the quarter and 1% on the year.

The Quarterly National Accounts for Q1 2009 show a fall of 2.4% on the previous quarter revised down from 1.9%. It is 4.9% lower than Q1 2008. The index was 110.9 for GDP at market prices and 101.9 for chained volume measures. The household saving ration was 3% compared with 4% in previous quarter. Real household disposable income fell by 2.4% following a 2.4% rise last year. Household final consumption fell by 1.3% compared to a 1.1% fall in the previous quarter. The volume of spending is 3.1% lower than at the same time in 2008. Both government and households were net borrowers. Financial corporations, private non-financial corporations and public corporations were among the net lenders.