The Staggers

The New Statesman’s rolling politics blog

The UK is back in recession

Cameron's week gets even worse.

By George Eaton Published 25 April 2012 9:31

British Chancellor George Osborne meets residents during the official opening of the Google Campus on March 29, 2012 Photograph: Getty Images.

It just gets worse for David Cameron. The Office for National Statistics has confirmed that the UK is officially back in recession. Output in the first quarter of this year fell by 0.2 per cent, following a drop of 0.3 per cent in the previous quarter. In other words, the technical definition of a double-dip recession (two consecutive quarters of falling output) has now been met.

Following the politically catastrophic Budget, this could not have come at a worse time for government. At the very moment that voters are losing faith in George Osborne's ability to manage the economy, the data confirms that they are right to do so. Ed Balls, who warned of the risk of a double-dip recession before any other senior politician, has been entirely vindicated.

And the economics are little better. The figures could yet be revised up (or down) but one thing is clear: there is no recovery to speak of. The worse-than-expected figures (the Office for Budget Responsibility forecast growth of 0.3 per cent) mean that Osborne will be forced to borrow even more, further damaging his reputation and imperiling the UK's cherished AAA rating. The Chancellor will, inevitably, pin much of the blame on the eurozone crisis but the inconvenient truth is that growth evaporated long before the current troubles.

As for Cameron, with PMQs and Rupert Murdoch's appearance at the Leveson inquiry still to come, the worst day of his premiership has barely begun.

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28 comments

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Fri, 2012-06-29 02:25 — Thomas Hollis (not verified)

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Tue, 2012-06-19 17:41 — Vandervart Souza (not verified)

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Thu, 2012-04-26 10:04 — martybee (not verified)

"Guys like them, that work for a living are the loneliest guys in the world. They don't belong no place. They come to work for their money and then they blow their stake paying Taxes and stuff and the first thing you know they're pounding in' their tail the next week to do the same thing all over again, and they ain't got nothing to look ahead to.
With us it ain't like that. We got a future. We aint like them other Guys George. Not us!
An' why?
Because.....because I got you to look after me, and you got me to look after you, and that's why.
Tell me bout the rabbits George"

With apologies to J Steinbeck.

Thu, 2012-04-26 07:06 — rain (not verified)

The coalition maybe struggling, but few trust Labour with the economy: even fewer trust Labour with our borders. Labour talks a great deal about an economic alternative. Labour's mythical plan B. Which is? Labour struggled with a full treasury, few expect Labour to achieve anything with an empty one.

Wed, 2012-04-25 19:23 — mike555

Borrowing and spending more would obviously result in better short term figures, the proof will be in the long term. It strange how the crisis under New Labour was all a "Global Crisis" but now it's all the Coalitions fault and not the Eurozone Crisis.

House prices and consumer debt were left to rip despite many years of warnings, you have to ask what those in power were doing about it?

Sat, 2012-04-28 18:02 — matthew fox (not verified)

More uninformed ranting from Bozo555.

This government has gone out of its way to let the eurozone spiral out of control.

One minute Cameron wanted the IMF to get involved, the next he wanted to ECB to take charge.

If you had any brains, you would understand, the root cause of the current economic problems in the UK and the Eurozone is austerity.

Sun, 2012-04-29 15:29 — mike555

Right Fox, so nothing to do with the housing and debt bubbles then? Remind us why we needed austerity in the first place? I doubt you will answer as usual.

Sun, 2012-04-29 17:36 — matthew fox (not verified)

Come on idiot, please reflect on the stupidity of your statement. According to you, the Eurozone is to blame, is it coming back to you?

If you wanted to parrot Osborne's excuses go ahead chump.

Both the UK and the Eurozone are in recession due to Austerity.

http://krugman.blogs.nytimes.com/2012/04/28/euro-austerity-continued/

Sun, 2012-04-29 20:39 — mike555

Oh look more insults and no answers from Fox. I didn't say the Eurozone was to blame, I said it's funny how when Labour were in power it was supposed to be all the fault of the global crisis after 10 years in power, but now all of a sudden it's the goverments fault after 2, can you see any double standards here?

I knew you wouldn't be able to tell us why austerity is needed, and you didn't disappoint as usual. What effect do you think the tripling of house prices had on the poor and their ability to buy family homes? And what effect do you think this had on the indebtedness of the UK consumer? I've been waiting for months for you to answer, but I think you know what the answer is which is why you can't bring yourself to admit it. It's easier to just call me childish names and say I'm a liar isn't it? - Still waiting for you to say what I've lied about, you will not be able to provide any evidence because as you well know I haven't lied.

Wed, 2012-05-02 16:40 — Matthew Fox (not verified)

Good job you didn't say the Eurozone was to blame chump, otherwise you would have been a bigger idiot then usual, and that is saying something.

So what are actually trying to say toilet brain, do you have a point to make?

Austerity is needed, really my simple minded friend?

Would you like to explain why the Government borrowed more in Mar 12, then it did in Mar 11?

Do you remember lying about the House Price boom circa 1997-2010, see I am starting with a easy one.

Thu, 2012-05-03 06:18 — mike555

Oh look, more pathetic insults and no answers, no surprises for any regular readers there. It strange how Fox can't say what effect the tripling of house prices had on the poor.

"Do you remember lying about the House Price boom circa 1997-2010, see I am starting with a easy one."

Absolutely laughable, remind us what happened to house prices between 1997 and 2010 Fox, then explain how this wasn't a boom? I've asked you before, but you will not be able to answer, as you will no doubt demonstrate by not answering again. I was being charitable to New Labour picking the stats from 1997 to 2010 (the period New Labour was in power rather than 1997 to 2007).

To help you here are the figures (take any quarters figures in 1997 or 2010, it doesn't matter, the overall picture is the same):

Q2 1997 Average house price was according to Nationwide (seeing as you've used the Nationwide stats before) : £58,403

in Q2 2010 Average house price was £168,719

In q3 2007 House Prices hit £184,131. A disaster for the poor and low paid. So what was I lying about Fox? Unfortunately for you the facts back me up 100%. Let's see if Fox will answer?

Sat, 2012-05-05 06:58 — matthew fox (not verified)

Answers like " All I Said " or " All indicators " are they coming back to you.

Funny how your rowing away from your original rant, which wasn't quite a question or even a statement.

" but now it's all the Coalitions fault and not the Eurozone Crisis "

What was the point of the words, can't you understand, what you have written?

Sat, 2012-05-05 12:42 — mike555

That's pitiful Matt. I've proven I'm not a liar.

Wed, 2012-04-25 18:02 — ClemtheGem (not verified)

So, Gordon Brown was right in 2010, it really wasn't time for a bunch of novices.
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Wed, 2012-04-25 22:52 — donotreply2 (not verified)

What a load of hot air. If you go back and read my remarks (now conveniently removed from the new website), I warned that the economy stood no chance of growing due to low investment, a high tax burden and onerous regulation, two years ago. My legal friends are telling me that repossessions are on the rise, both in commercial and residential real estate...........Only time and a rise in investment can help the economy, not more public spending.

p.s. what on earth are the same clowns like Balls still doing in public office?

Wed, 2012-04-25 15:34 — mbrecker (not verified)

Admit we can never repay the national debt. Write it off and start over.

Wed, 2012-04-25 14:20 — Beeclarke (not verified)

Complete and utter arrogance and incompetence by George Osborne and David Cameron. They have taken an economy that was growing under Labour with unemployment falling and taken us back to a recession in under 2 years. Extraordinary! All this nonsense of the public sector crowding out the private sector has been proved wrong and anyone who says otherwise is ignoring the evidence. The fact is for an economy to grow it needs both a strong private and strong public sector. Ed Balls has been proven right. Cutting too far and too fast has wrecked the economy. David Blanchflower has been proven right & all his detractor's on these comments page must now eat large slices of humble pie. Love it!!

Wed, 2012-04-25 20:45 — mike555

Keep interest rates at all time lows, print a load more funny money with QE, keep house prices at socially divisive levels? It's so easy isn't it? What about when the stimulus runs out? I don't believe the Coalition are any better than New Labour when it comes to house prices, before I get the predictable Tory Troll nonsense, I don't like either of them.

Many are still paying the cost of the house price and consumer debt booms which occurred under New Labour. What effect do you think the tripling of house prices had on the poor and low paid and their ability to buy family homes and raise families? Strange how no one can answer this question, why is that? A generation will never forget.

Wed, 2012-04-25 11:55 — Barrie J (not verified)

As far as my friends, relatives, colleagues and customers are concerned we haven't come out of the last recession yet.
I know of seventeen small businesses that are no longer trading.
It is impossible to see how this government or any other is going to provide the environment to turn this situation around anytime soon.
They all seem too concerned with selling policy for their donors to worry much about GB plc

Wed, 2012-04-25 11:43 — Akin (not verified)

Take a bow David Blanchflower, you predicted this.

Wed, 2012-04-25 11:34 — Benjamin Rae (not verified)

One thing is for sure. It won't be Osborne or the government's fault. They can't be expected to be to take responsibility for decisions they take. That's just unreasonable

Wed, 2012-04-25 11:28 — nourredine

A comment from Osborne in Sky News, 26 January 2010,
"Economy first came out of recession in January 2010, with growth of 0.1% in three months, Osborne said "the British economy couldn't have weaker growth""

"if you're looking for the reason why the British economy couldn't have weaker growth at the moment, literally statistically, it's only 0.1%, the reasons for that is that businesses are uncertain about the future, there's no government plan for the recovery, there's no government plan that is credible when it comes to dealing with the deficit and answering those things would help job creation"
Now! Osborne, the shoe is in the over foot, what can you say today?
Please do not blame European economies.

Wed, 2012-04-25 11:36 — Barrie J (not verified)

Damn, you've just stolen his thunder - I believe he has just blamed European economies

Wed, 2012-04-25 10:39 — soonah99 (not verified)

Osbourne should stand down. He really is like a rabbit in the headlights. Part-time and with the wrong qualifications.

Wed, 2012-04-25 10:09 — Arturo Bandini (not verified)

Yes, Christian. And who has done more to talk down the British economy and put the frighteners on consumers and investors? A clue lies in the picture at the top of the article of a rather pasty-faced Gideon.

Wed, 2012-04-25 10:04 — Christian Hills Road (not verified)

The problem with acknowledging that we are now in a recession, is that now it will only exacerbate the problem. Consumer and business confidence with plummet reduces both consumer and investment expenditure, reducing aggregate demand and economic growth even further. Hooray. No doubt, as a result, we'll be here a lot longer.