The Staggers

The New Statesman’s rolling politics blog

Blow for Osborne as growth is revised down

New figures mean that the economy hasn't grown for nine months.

By George Eaton Published 05 October 2011 11:09

David Cameron's big day hasn't got off a good start. Ahead of his speech at 2:30pm, it's emerged that the economy grew by even less than we thought this year.

The Office for National Statistics has just revised down growth for the second quarter of this year from 0.2 per cent to 0.1 per cent, and growth for the first quarter of this year from 0.5 per cent to 0.4 per cent. The upshot is that the economy hasn't grown for nine months (the economy contracted by 0.5 per cent in the fourth quarter of last year).

All of which confirms why Britain needs a plan for growth. But after George Osborne's feeble speech this week, I wouldn't hold your breath.

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Tags: Party Conferences 2011 George Osborne Conservatives

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23 comments

Wed, 2011-10-05 11:48 — swatantra nandanwar

If growth is revised down yet again we'll be in double dip. Britain could do with someone of the calibre of FDR, not a bunch of novices.

Wed, 2011-10-05 11:49 — Marcus (not verified)

It wont be the last time.

This government needs to do something now. Not sit on its hands, or follow Balls' lead (which would be a disaster), but actually push us to the forefront of the economic revolution.

Wed, 2011-10-05 11:49 — Maz (not verified)

George Osborn's position as Chancellor can only be explained in one of two ways: 1) He is either ideologically committed to divisive and destructive economic policies, in order to run down and asset strip national institutions and put them into the hands of private industry; or 2) He is a complete dunce. Personally, I favour the latter explanation.

Wed, 2011-10-05 12:01 — Shinsei67

No one is pretending that economic conditions aren't poor.

However the fact that the USA is growing no faster than the UK despite their large fiscal stimulus shows that the Balls model of borrowing more money clearly isn't the right solution.

Wed, 2011-10-05 12:08 — tuttifrutti (not verified)

Maz
Can it not be explained by both?

Wed, 2011-10-05 12:09 — Awake!

bastard tory, where's the gROWTH!!!
All i see is falling mortgage rates.
And why hasn't he cut teachers salaries by 20% yet like in Ireland, greece, spain etc
He needs to do this NOW!!!

Wed, 2011-10-05 12:20 — Dave C (not verified)

Osborne's plan for growth seems to consist of weekly bin collections, an 80mph speed limit, a rejig of the right-to-buy scheme, a second annual freeze on council tax, making it easier to sack people, and "credit easing".

Even assuming they would work, it's unlikely to have any short-term effect on the economy. Next May's council elections may be pretty grim for the Coalition.

Wed, 2011-10-05 12:26 — Maz (not verified)

tuttifrutti

Yes indeed. I should have included an option 3), both of the above.

Wed, 2011-10-05 12:42 — Arturo Bandini (not verified)

@Awake! - how on Earth could cutting people's wages stimulate the growth you seem to be demanding.

You may be as big a dunce as Gideon himself.

Wed, 2011-10-05 12:47 — JJ (not verified)

Nick - the US has, in fact, been growing rather faster than the UK. It's grown 1.2% in the past 9 months, as opposed to, um, nothing. It's not been doing great, but it's not exactly been doing that much by way of stimulus either, and is now embarking on a fully fledged policy of austerity.

Wed, 2011-10-05 15:12 — Chris Yapp (not verified)

What would it now take for deficit to be back to the level he inherited?
If we have another 9 months of stagnation it's going to test it, let alone a crisis or recesssion..

Wed, 2011-10-05 15:39 — Marxist Nutter (not verified)

@ Maz

I reached exactly the same conclusions as you. If explanation 2 is true what does this say about the UK's leading university. On this reading it really does look like Giddeon has zero grasp on basic economic theory. Thus I am increasingly of the view he is not so dumb and seeks to asset strip the nation, grab what he can for himself and his toff mates; then retire to a nice tropical island and sip cocktails laughing as the UK tears itself apart...I am convinced this is the plan and Cameron is completley on board with it. In fact the plan was probably devised 'on the playing fields of Eton'.

Wed, 2011-10-05 15:47 — Indu Pendent (not verified)

The difference between AAA and AA is an extra 3% on the rate of interest the UK government would have to pay on servicing the national debt.

THE most important thing for us all is keeping the AAA, over an above growth. We are totally screwed if we lose the grading.

Fiscal stimulus will cause the AAA to be down graded as it moves us further away from reducing the national debt.

If exports stall, which are what drives growth, then the coalition will need to think about implementing mild austerity - we have not had austerity yet: the UK is having an easy time compared to other countries.

Most deficit savings are being achieved by slowing the rate of recruitment into the public sector with a very small number of redundancies. There is so much more the coalition could be doing to save money if they need to.

Wed, 2011-10-05 17:39 — Hugh Markey (not verified)

My - didn't George make an entance: Tom Cruise on stilts!
Put that parss the parcel routine. Wrapping up loans and issuing bonds? We're sure we've heard of that before.
And what's all this about funding two Russian IT scientists? They may have discovered a wonderful material, carbon, we think, which will eventually replace silicon and allow electronic devices to undergo further minuturization in addition to increasing the velocity of their internal velocity.
But these Ruskies went to state schools.
#We know George didn't pass the 11 Plus besides losing out at uni to
grammer school swots but George claims this is not the time for personal pique - but Tory principle.

Gobsmacked

Wed, 2011-10-05 17:41 — Anonymous (not verified)

@Indu Pendent
If economy does not grow then tax receipts will stagnate or fall.

With over 100,000 every year young people entering the job market, the social security bill will go through the roof.

The combination of the above will cause bigger government budgetary problem, either way the credit rating is going to drop.

Wed, 2011-10-05 18:36 — RCMoya612

'However the fact that the USA is growing no faster than the UK despite their large fiscal stimulus shows that the Balls model of borrowing more money clearly isn't the right solution.'

US GDP growth over 9 months: +1.01%
UK GDP growth over 9 months: -0.01%

US GDP growth over 12 months: 1.63%
UK GDP growth over 12 months: 0.60%

US growth since end of recession: 4.988%
UK growth since end of recession: 2.580%

US GDP now vs. previous peak: -0.4%
UK GDP now vs. previous peak: -4.4%

I'm getting REALLY REALLY tired being captain obvious here. But so long as the trolls have even the smallest chance to convince someone of their lies, I guess I'll have to continue slogging on.

Ladies & Gentlemen, George Osborne and his Tory fellow-travellers are wedded to a failure of a policy. You can't have produced the weakest growth in the OECD, save for four other countries (UK GDP growth over the last year is 30th out of 34 countries), and have a shred of credibility. You're pissing in the wind.

Wed, 2011-10-05 19:35 — matthew fox (not verified)

more dross from Indoo, 110,000 public sector workers have lost their jobs, so silly sausage doesn't understand the term " Small ".

Exports have stalled, if Indoo had taken to time to read the article on Bloomberg, exports are at a 12 month low.

Wed, 2011-10-05 20:05 — matthew fox (not verified)

Super sorry, Export orders are at a 12 month low, I would hate to be tarred with the same brush Indoo.

Wed, 2011-10-05 20:56 — Maz (not verified)

@ Marxist Nutter

"...it really does look like Giddeon has zero grasp on basic economic theory", Indeed! Not to mention zero grasp of his chosen subject at 'the UK's leading university', Modern History.

Wed, 2011-10-05 23:33 — Awake!

RC Moya
once again u compare reserve currency of the world vs the pound. U don't get that UK can't borrow like the states, plus we have more advanced welfare state here.
Also, if you;re right i,e, we should borrow more, why is Bernanke not doing so again? why did fisher say it's pusing on a string?
You read too many stats. get out and talk to business leaders some of whom are sitting on piles of cash but can't see any demand. if they, bernanke, el merian from Pimco don't see the demand, why do u insist that the govt should create an unsustainable demand? Do you even accept that the problems are deeper than can be resolved by a fiscal stimulus?
Comparing UK and US like for like... very dangerous sir, and u know it. Weird...

Wed, 2011-10-05 23:37 — Awake!

rc moya
your policy would push up interest rates and bring on a currency crisis in the uk- we don't need that as well as a debt crisis.

Wed, 2011-10-05 11:21 — Stu (not verified)

He had better ideas than Balls had and the real test is the nextfew months if George implements his plans. Lets hope for his sake and ours that he's right!

Italy has just had their credit rating slashed, next up spain... the recovery of the eurozone is bleak... ours will suffer too.