Unlike the UK, France and Germany aren't in recession

Osborne was wrong to blame the eurozone for our double-dip recession.

George Osborne is fond of blaming the eurozone crisis  for Britain's economic woes (he recently claimed that the crisis had "killed off" growth in the UK) , so it's worth noting that, unlike the UK, the euro's two largest members - Germany and France - aren't in recession. While the British economy contracted by 0.7 per cent in the second quarter of this year, Eurostat figures out today showed that the French economy remained flat, while Germany grew by 0.3 per cent. In the previous quarter, Britain shrunk by 0.5 per cent, while Germany grew by 0.5 per cent and France stagnated.

Of course, since much of our trade is with the eurozone, its lack of growth (it collectively shrank by 0.2 per cent in Q2), doesn't help. But as even Tory MPs concede, it is some exaggeration to claim it "killed off" our recovery. The Chancellor accomplished that all by himself. It was his absurd claim that the UK was on "the brink of bankruptcy" and his premature austerity measures, most notably the 2.5 point rise in VAT, that destroyed confidence and strangled growth. With the exception of Italy, Britain is the only G20 country to have suffered a double-dip recession.

At this moment, contrary to Osborne, Britain should actually be profiting from the eurozone crisis. With investors ever more reluctant to lend to eurozone countries, the UK can afford to borrow at the lowest interest rates for 300 years. We are, as Osborne has said many times, a "safe haven". Yet the Chancellor appears determined not to take advantage of this fact. He has continually refused to borrow for growth (in the form of tax cuts and higher infrastructure spending), despite little evidence that this would lead to a rise in British gilt yields. It is only Osborne's political pride that is preventing a change of direction. Borrowing for growth would be a tacit admission that his nemesis, Ed Balls, was right and that he was wrong. Until the Chancellor backs down, we will all collectively pay for his stubbornness.

George Osborne claimed that the eurozone had "killed off" the UK's economic recovery. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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PMQs review: Jeremy Corbyn prompts Tory outrage as he blames Grenfell Tower fire on austerity

To Conservative cries of "shame on you!", the Labour leader warned that "we all pay a price in public safety" for spending cuts.

A fortnight after the Grenfell Tower fire erupted, the tragedy continues to cast a shadow over British politics. Rather than probing Theresa May on the DUP deal, Jeremy Corbyn asked a series of forensic questions on the incident, in which at least 79 people are confirmed to have died.

In the first PMQs of the new parliament, May revealed that the number of buildings that had failed fire safety tests had risen to 120 (a 100 per cent failure rate) and that the cladding used on Grenfell Tower was "non-compliant" with building regulations (Corbyn had asked whether it was "legal").

After several factual questions, the Labour leader rose to his political argument. To cries of "shame on you!" from Tory MPs, he warned that local authority cuts of 40 per cent meant "we all pay a price in public safety". Corbyn added: “What the tragedy of Grenfell Tower has exposed is the disastrous effects of austerity. The disregard for working-class communities, the terrible consequences of deregulation and cutting corners." Corbyn noted that 11,000 firefighters had been cut and that the public sector pay cap (which Labour has tabled a Queen's Speech amendment against) was hindering recruitment. "This disaster must be a wake-up call," he concluded.

But May, who fared better than many expected, had a ready retort. "The cladding of tower blocks did not start under this government, it did not start under the previous coalition governments, the cladding of tower blocks began under the Blair government," she said. “In 2005 it was a Labour government that introduced the regulatory reform fire safety order which changed the requirements to inspect a building on fire safety from the local fire authority to a 'responsible person'." In this regard, however, Corbyn's lack of frontbench experience is a virtue – no action by the last Labour government can be pinned on him. 

Whether or not the Conservatives accept the link between Grenfell and austerity, their reluctance to defend continued cuts shows an awareness of how politically vulnerable they have become (No10 has announced that the public sector pay cap is under review).

Though Tory MP Philip Davies accused May of having an "aversion" to policies "that might be popular with the public" (he demanded the abolition of the 0.7 per cent foreign aid target), there was little dissent from the backbenches – reflecting the new consensus that the Prime Minister is safe (in the absence of an attractive alternative).

And May, whose jokes sometimes fall painfully flat, was able to accuse Corbyn of saying "one thing to the many and another thing to the few" in reference to his alleged Trident comments to Glastonbury festival founder Michael Eavis. But the Labour leader, no longer looking fearfully over his shoulder, displayed his increased authority today. Though the Conservatives may jeer him, the lingering fear in Tory minds is that they and the country are on divergent paths. 

George Eaton is political editor of the New Statesman.

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