Can Osborne avoid a double-dip recession?

The private sector remains sufficiently weak for any withdrawal of state support to be a concern.

With George Osborne unveiling £6.2bn of spending cuts today and the Queen's Speech taking place tomorrow, this is likely to be the most significant week for the coalition government for some time.

Osborne will be announcing the full details at a press conference at the Treasury at 10am, but he's just endured a grilling on the Today programme. The Chancellor sounded on top of his brief, but to my ear at least, his dismissal of fears of a double-dip recession seemed remarkably cavalier.

He began by stating that he had taken advice from the Bank of England and the Treasury (what if they're wrong?) and added that the cuts were "about showing the country we mean business". But Osborne ignored the fact that private-sector growth remains sufficiently weak for any withdrawal of state support to be a concern.

As Andrew Self, an economist at Markit, notes:

Whether or not the improvement in the private sector will offset the downturn in the public sector and therefore avoid a double-dip recession remains unclear.

Osborne is likely to receive a boost today when growth figures for the first quarter of this year are revised upwards from 0.2 per cent to at least 0.3 per cent. But with an increase in VAT to 20 per cent on the cards, a move that would cost each household £425 a year on average, any relief from this growth is likely to be short-lived.

Reasonable estimates suggest that a hike in VAT could cost 47,000 jobs and lead to the closure of almost 10,000 shops.

As ever, the question of when to cut is insignificant compared to that of how to rebalance the economy away from its overdependence on financial services. As things stand, there is little evidence that Osborne is adequate to the task.

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George Eaton is political editor of the New Statesman.

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Tory Brexiter Daniel Hannan: Leave campaign never promised "radical decline" in immigration

The voters might not agree...

BBC Newsnight on Twitter

It was the Leave campaign's pledge to reduce EU immigration that won it the referendum. But Daniel Hannan struck a rather different tone on last night's Newsnight. "It means free movement of labour," the Conservative MEP said of the post-Brexit model he envisaged. An exasperated Evan Davis replied: “I’m sorry we’ve just been through three months of agony on the issue of immigration. The public have been led to believe that what they have voted for is an end to free movement." 

Hannan protested that EU migrants would lose "legal entitlements to live in other countries, to vote in other countries and to claim welfare and to have the same university tuition". But Davis wasn't backing down. "Why didn't you say this in the campaign? Why didn't you say in the campaign that you were wanting a scheme where we have free movement of labour? Come on, that's completely at odds with what the public think they have just voted for." 

Hannan concluded: "We never said there was going to be some radical decline ... we want a measure of control". Your Mole suspects many voters assumed otherwise. If immigration is barely changed, Hannan and others will soon be burned by the very fires they stoked. 

I'm a mole, innit.