The eurozone crisis rumbled on, the UK economy didn't grow at all, productivity fell, world trade growth slowed, emerging markets wobbled and manufacturing output contracted. 2012 didn't deliver much in the way of good news … or did it? Here's a quick recap on some notable economic and policy events of the past year ….. including at least a few reasons why 2012 wasn't as bad as all that.
1. Manufacturing activity started the year relatively strongly with the January PMI moving back into expansionary territory at 52.2. Back in February manufacturing activity in France and Germany was still growing, according to the PMI – but that would be all for 2012. In the same month, while the Bank of England Governor didn't yet know it, February was the last time he would need to write to the Chancellor explaining why inflation was still above target.3. Better news from the labour market in March, with the number of people claiming unemployment benefits falling for the first time in 17 months. A couple of record highs this month - export volumes of cars and pharmaceuticals were the best on record.
4. The overseas trade missions continued in April, with £200million of deals announced following a delegation to Japan. Mixed news for capital intensive manufacturers; the headline rate of corporation tax comes down to 24%, but the main rate of capital allowances is also cut to 18%.5. Hopes that the squeeze on household budgets will start to ease come as CPI inflation falls below the 3% mark in May for the first time since early 2008. Goods exports to China also exceeded the £1 billion mark this month.6. Not much in the way of good news in June, with any possibility wiped out by the additional Bank holidays skewing official statistics. The Bank of England Governor came to the Treasury Select Committee with the downbeat message that the UK is ‘not yet half way' through the crisis.7. Efforts are upped again to increase the flow and reduce the cost of credit with July's announcement of the Funding for Lending scheme. Mounting growth concerns prompt an additional £50bn of asset purchases by the Bank of England.8. August brought sporting brilliance to Britain – we built the venues (despite the views of some US dignitaries); people came and we won a lot of medals. The centrepieces of the opening ceremony were also manufactured in the UK.9. The European Central Bank got serious in September and announced the details of its latest bond purchase programme, leading to a (temporary) easing in financial stress indicators across the region. In the UK talk of a new industrial strategy starts to become a reality and manufacturing workforce jobs rose to the highest level since the end of 2009.
10. In October the output of the UK's aerospace sector posted annual growth of 16% and hit an all-time high; in the same month a major order for the sector was secured from Turkey.11. The long-awaited Energy Bill was published in November, which should provide the foundations for greater certainty for low-carbon investors and manufacturers. The UK manufacturing PMI also picked up – but not enough to signal outright expansion.12. Some better news for the Chancellor as the office for Budget Responsibility confirms government still on track with deficit reduction plan in December. Government also announce temporary action to boost business investment to kick in from 1 January 2013.