Hey guys, it's Sasha. The UK economy shranked by 0.5 in July which was worse than a 0.2 percent drop that was forecasted by analysts and the media of course got very excited because look, it's the biggest drop in seven months. But just one month ago, the same media said the UK economy grows faster than expected after surprisingly strong June The truth is that the UK economy is not growing fast and it is not collapsing either. It has been completely flat and stagnant for the last two years, going absolutely nowhere.

Production output fell by 0.7 in July after going up 1.8 percent in June. But again, look at this chart. UK production is also going nowhere. Construction is doing worse than it did five years ago in 2018 and in 2019, it's the light blue line on this chart.

The purple line is the repair and maintenance line. So I guess whatever construction they did before is crumbling a little. but going back to UK GDP The UK government sat around round and had a little think on how to solve the problem of the UK economy doing really badly and they came up with a radical new taxation system, a master plan of how to attract global companies and new tech startups to the UK the biggest ever investment in infrastructure, and a new transport Hub connecting the Northwest to power the UK into the future. No, they didn't do any of those things now because that would actually require having brains and you know, doing work which is difficult now.

Instead, the government just fudged the numbers I Am not even kidding. Here is the UK GDP chart from last month from one month ago. and here is the same chart from this month's report. Notice anything different? Yep, they've added this light blue line called the Indicative Blue Book 2023 data because the UK government published this thing called the Blue Book 2023 and this book is going to update.

create the methodology behind how you K GDP is calculated because the old way showed numbers that weren't good enough. You see the old data set that UK's economy is doing worse now than it did back in 2019. So the accountants at the Office of National Statistics worked their magic and change the way that GDP is calculated so that the light blue line goes higher. The absolute miracle in this new way of calculation GDP is that it doesn't seem to affect anything at all.

Before covid this particular way of doing maths only Magics numbers when you need them. from the moment covert arrives and after Brexit happens, but not before and you might be wondering what it is that they actually changed. Well, it's a mystery hidden inside a conundrum, shrouded by veil of uncertainty and obscured by an ether of the unknown. You can read the official explanation from the Office of National Statistics on their website.

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So why not let Weibo pay you to try them out? Remember the link is in the description and as always, remember that your capital is at risk. So how did the UK government fudge the numbers? Well, if you read through all of the mumbo jumbo, the biggest piece seems to be the impact of globalization. This is important for understanding the impact of increasingly complex Global Supply chains and Geographic fragmentation of manufacturing. Customs declaration data measure physical movements across the UK border effectively, and in most cases this is correlated well with a change in the economic ownership.

However, there are circumstances where it will capture a physical input or export of goods, but there is no change in economic ownership. There will also be cases where it will miss a transaction entirely if it does not cross a UK border. So to measure UK GDP more accurately, these accountants have realized that when UK companies do businesses abroad which now includes Europe and a whole lot of UK companies just happen to do a lot of their business in Europe where you know the physical Supply and the location of goods is abroad and the actual people working and the entities working and paying taxes are all abroad, they're working abroad. They're paying those taxes abroad.

The benefit of that entire thing should of course be counted to the UK GDP GDP. By the way, according to the Office of National Statistics themselves, is the total value of output in the economic territory and the economic territory is defined as Great Britain Northern Ireland any free zones under UK Customs control and the UK National airspace and Territory tutorial Waters But I guess now UK Territories also include random factories in Vietnam. If you use this way of accounting then any country where a lot of the production a lot of the process in the way that things are produced, delivered, sold made is outsourced to other countries, then they that country that is outsourcing would naturally see a bump to their GDP. They begin attributing some of those items to their own domestic gross products because you are attributing the GDP of other countries to yourself.

and they only showed this chart for one month and one month only in this report because from next month this data is going to be incorporated into all future reporting so that we can all pretend that things are going great and that in fact they were going great when we didn't really feel like it so great In fact, that the new data shows wages continue growing at a record rate and still accelerating which is now fueling a worsening way wage price spiral which is making the UK inflation problem a lot worse. And for the last year I've been saying that the UK government giving outsized pay increases to public sector workers is unfortunately making the problem worse and I got a boatload of hate for saying it. And hey, I understand I get it because nurses, doctors, public, other public sector workers, teachers. they all don't earn a huge amount of money and they do have bills to pay and they do need to get pay increases.

But hey, perhaps I am just not a politician. I Am not here to say things that perhaps you want to hear: I'm here to just call Spade Space and explain what's happening. And wouldn't you know it in a recent wage data, the light blue line is the public sector total. This is the growth in wages of the total amount of money given to the public sector.

and you can see that it is a lot higher well than everything on the chart. But in particular, it is a lot higher in the last month than the green line which is the public sector regular yellow one. And that's because this summer the UK government gave staff in the NHS and in the Civil Service to one-off payments worth around two thousand pounds. And yes, I am aware that making two one-off payments in the space of two months is a ridiculous oxymoron.

and at the end of last week, I also just happened to mention that the triple lock in UK pensions is not only unsustainable, but is now actively driving inflation. And it's funny because this just keeps happening at the moment. But on Monday morning, the UK government announced that they're planning to get rid of the triple log. Hmm.

Interesting timing given that absolutely nobody in the government has talked about it for years. Nobody in the media happened to mention it, all the media by the way. and every analyst is saying also at the same time that the UK will do one more rate hike at the end of the September meeting and that will be that inflation will be conquered. It is done and dusted.

We, we're through the worst of it. It is now going to go to Zero By Christmas inflation is completely finished, there is no more need for increases and I I Thought for a moment that perhaps I woke up in an alternative Universe in a parallel world where the data is different. So I went and checked. But no, UK inflation is still at 6.8 percent or 6.4 percent if you include housing in the latest data.

While Goods inflation has fallen Services Inflation is actually still growing because wages are growing and while inflation is at six point eight percent, the interest rate is at 5.25 So even after that, one extra increase is gonna set at 5.5 percent significantly below the level of inflation. and I mean, well, anything could happen. But every economic theory book that you would ever read will tell you that inflation running hot and still sitting substantially above the bank of England base rate will not usually just drop down all by itself without the rate going higher or other measures being applied. especially when we're seeing upward pressure on inflation over the next six to 12 months instead of downward as everyone seems to be reporting as fixed home mortgages, rates run out and people's mortgages go up by 70 to 100 percent and the wages at the same time are growing at the fastest rate since that data started being collected.

The real problem is that too many of these analysts and people in the UK government just look over at what's happening in the United States and assume that the same exact thing will just miraculously happen here. even though the two countries and the two economies and the circumstances and everything have major differences and the US economy just happens to be booming while the UK economy is stagnant at best. I Was very confused when the UK government said there was no inflation problem at all in 2021. There was nothing at all that anyone should worry about it's all going to be fine, but it clearly wasn't and there was obviously a massive off problem that I was talking about on this channel.

and I'm equally confused now because well, sure, Anything could happen. crazy things do happen. Inflation could go down I guess, but the data says that it's now very sticky and is going to take a lot more than just one or more rate hike and nothing else to get rid of it. And the problem is that UK consumers are already after this next Freight hike.

The median UK income will not be enough to pay median UK bills. Families up and down the country are going to be in Dire Straits and this could end very badly. but the UK government have applied this policy of sticking their fingers in their ears, singing la la la and pretending that nothing is happening. Maybe just maybe appointing a Chancellor the guy in charge of the country's finances who has never actually worked in finance wasn't the best move in the middle of the worst financial crisis in a generation.

But what do I know, right? I am just a random guy on YouTube who doesn't know or understand anything and Rishi by the way I know that you guys watch my videos because you just keep randomly coming out and denouncing or doing some of the things that I mentioned immediately after I mention them. So maybe you should just give me a call. You know, instead of launching a two-year inquiry into what happened, it might be better to launch a two-week project to actually try and fix things so that the country might come out of this downward spiral. Maybe I'm not holding out too much hope, but maybe there is a small part of you that actually cares about millions of people suffering and struggling to feed their kids struggling to heat their homes.

I Guess at the end of the day, you don't have any idea what that actually feels like or how it makes those people feel inside, or how those kids feel when they look up and see their mom and dad. Really? And I mean really struggle. Especially because your incompetence in managing the economy, your inaction throughout the whole of 2021, your inability, ability to understand how the actions that you took would impact the economy and you're up repeatedly is the reason why so many people are in. The The Time To Act is now.

For the entirety of this year, the Chancellor and the UK government and Urishi have sat around twiddling their thumbs, doing absolutely nothing, just hoping and praying that the problems just go away by itself. The inflation? It will go away. It's gonna halve because you know I said. So I'm not going to do anything to make it half.

I'm just gonna make an announcement at the beginning of the year that it's gonna have and I'm just gonna sit there hoping that it eventually goes. That way, you need to actually do something. So stop being a useless politician, stop saying words that don't actually mean anything. roll up your sleeves and fix it.

And if you don't know how to fix it, then get the out of the kitchen. unless someone who does know, fix it instead.