Double dip recession: no-one else to blame, George
As Britain spirals into the first double-dip recession since Ted Heath was Prime Minister, the British public will be asking itself a question this morning: “How ever did we allow this gang of posh boys to convince us they knew what they were doing?”
The news came early this morning that Britain’s output had contracted by just under a quarter of a percent in the last three months, making it two quarters in a row output has fallen. That, added to the previous flat quarters, reveals a very worrying picture as Britain is officially back in recession.
Comparing 2012 Q1 with 2011 Q3
GDP down 0.5%
Manufacturing down 0.8%
Construction down 3.2
Services up 0.1%
Government services up 0.6%
Distribution down 0.4%
Transport down 0.1%
Business down 0.1%
First quarter construction output was down 3%, the largest fall since 2009, a massive increase on the already steady decline shown by the drop of 0.2% of the previous quarter.
The figures are, however, only preliminary numbers based upon 42% of total output and may well be revised upwards or downwards when the final figures come in. The bad news is that in recent years it has nearly always been downwards.
The most revealing statistic however, is not the plunge into recession, but the comparison between what George Osborne said would happen and what has actually happened. In June 2010 the Chancellor’s deficit reduction plan predicted that the economy would grow by 4.3% in the two years since he arrived at the Treasury. In fact is has grown by a total of just 0.4% and has been falling for the last six months.
By any measure, this is indicative of a failing plan. George Osborne’s plans are in complete disarray. Or as the Institute for Public Policy Research says: “This is a further blow for the government’s reputation for economic competency.”
The City economists who are natural supporters of the Chancellor and his party were completely wrong-footed by this announcement – many were confidently predicting a growth figure of between 0.1% and 0.2%, despite virtually every independent economic forum saying otherwise.
The basis for their confidence lies more in their ideological commitment to a party that has visited terrible hardship on the ordinary people of Britain while the champagne continues to wash down the canapés in the square mile. In fact, since the recession caused by the American Banking crisis in 2008-2009, recovery has been incredibly slow as result of the Government’s hard-line insistence on cutbacks. As the Guardian puts it: “recovery has been slow – the weakest in 100 years, weaker than after the Great Depression, the 70s oil shock or the recessions of the 80s and 90s”.
The Government is trying to blame everyone but themselves for the collapse in the economy – the latest is “it’s the Eurozone crisis”.
However, Tim Leunig, chief economist at Centre Forum says: “The construction industry is not a Eurozone issue.”
He goes on to point out: “It’s important to remember that the initial British GDP quarterly figures are hopelessly unreliable, they are quick, and they involve guesswork. The Bank of England is very sceptical. Whether it’s plus 0.1 or minus 0.1 the economy is in the doldrums. Since the start of the recession Canada has got back to its previous peak so has Germany and the US. They are all richer than they were. France is back to where it was. Japan’s is closer. Only Italy is worse. Within the G7 only Italy is doing worse than us.”
Paul Kenny GMB General Secretary said "The Tory/Lib Dem government ignored warnings that austerity would drag uk economy back into unnecessary double dip recession.
The Lib Dems ignored their own warnings to the electorate when they signed up to spending cut backs that sent us back into recession. Labour Chancellor Alistair Darling was following the right policies to support the economy and he should be given credit for this.
Tory MP Nadine Dorries is right to accuse Mr Cameron and Chancellor George Osborne of being "arrogant posh boys" with no understanding of ordinary voters. She missed Nick Clegg another arrogant posh boy who joined them to recklessly abort the economic recovery underway in the UK in 2010.
Job creation now underway in the US economy would also be well underway in the UK too were it not for this deliberate act of government policy.
The electorate on May 3rd must deliver a clear message to Tories and Lib Dems that we want them to follow the proven Obama route to economic recovery and that mass unemployment is not a price worth paying."
Inevitably, the Treasury predictably says the problems lie with the Eurozone saying of a recession: "it would be hard for the UK to avoid one".
Cameron and Osborne can’t avoid one salient fact – the only country in the G7 doing worse than us is Italy. This crash must be laid firmly at their door and the British public must repay this at the ballot box.