Osborne’s Britain lags behind France and Germany

The UK economy continues to struggle but its competitors are racing ahead.

France and Germany have just released their growth figures for the first quarter of 2011 and they show that Britain continues to lag behind its main competitors. The French economy grew by 1 per cent, its fastest rate of expansion for five years, and the German economy grew by 1.5 per cent, its highest level of growth since the financial crisis.

But while France and Germany outperformed expectations, the UK grew by just 0.5 per cent in Q1 (below the OBR forecast of 0.8 per cent), failing even to recover the lost output from the previous quarter. As Sunder Katwala pointed out, "a 0.5 per cent increase on the reduced figure doesn't make up for the 0.5 per cent fall from a higher base".

When the coalition entered office the economy was growing at an annual rate of more than 4 per cent (growth in the second quarter, thanks in part to Labour's fiscal stimulus, was 1.1 per cent), but for the past six months it has flatlined. And that's before the bulk of the spending cuts has been implemented.


Earlier this month, Osborne's team made a risible attempt to claim that the UK economy had outperformed that of the US, which grew by 0.4 per cent in the first quarter. But as I explained at the time, this is an entirely bogus comparison. As the graph shows, while the British economy shrank by 0.5 per cent in the previous quarter, the US economy grew by 0.8 per cent. Thus, the US experienced real growth in Q1, while the UK didn't even recover the output that it lost in Q4.

The reality is that the British economy, which was at the top of the EU growth table in the first half of 2010, is now near the bottom. It isn't just the likes of the US, France and Germany that have raced ahead of the UK, Italy, Spain, the Netherlands and Belgium have overtaken us as well. Only Portugal and Greece have performed worse over the past six months.

A recovery that was already set to be weaker than those of the 1970s, 1980s and 1990s is now likely to be weaker still. There is every possibility that the Office for Budget Responsibility will be forced to downgrade its growth forecasts for the fourth time and that the coalition will miss its deficit targets. Osborne's plan isn't working.

George Eaton is political editor of the New Statesman.

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No, IDS, welfare isn't a path to wealth. Quite the opposite, in fact

Far from being a lifestyle choice, welfare is all too often a struggle for survival.

Iain Duncan Smith really is the gift that keeps on giving. You get one bile-filled giftbag of small-minded, hypocritical nastiness and, just when you think it has no more pain to inflict, off comes another ghastly layer of wrapping paper and out oozes some more. He is a game of Pass the Parcel for people who hate humanity.
For reasons beyond current understanding, the Conservative party not only let him have his own department but set him loose on a stage at their conference, despite the fact that there was both a microphone and an audience and that people might hear and report on what he was going to say. It’s almost like they don’t care that the man in charge of the benefits system displays a fundamental - and, dare I say, deliberate - misunderstanding of what that system is for.
IDS took to the stage to tell the disabled people of Britain - or as he likes to think of us, the not “normal” people of Britain -  “We won’t lift you out of poverty by simply transferring taxpayers’ money to you. With our help, you’ll work your way out of poverty.” It really is fascinating that he was allowed to make such an important speech on Opposite Day.
Iain Duncan Smith is a man possessed by the concept of work. That’s why he put in so many hours and Universal Credit was such a roaring success. Work, when available and suitable and accessible, is a wonderful thing, but for those unable to access it, the welfare system is a crucial safety net that keeps them from becoming totally impoverished.
Benefits absolutely should be the route out of poverty. They are the essential buffer between people and penury. Iain Duncan Smith speaks as though there is a weekly rollover on them, building and building until claimants can skip into the kind of mansion he lives in. They are not that. They are a small stipend to keep body and soul together.
Benefits shouldn’t be a route to wealth and DWP cuts have ensured that, but the notion that we should leave people in poverty astounds me. The people who rely on benefits don’t see it as a quick buck, an easy income. We cannot be the kind of society who is content to leave people destitute because they are unable to work, through long-term illness or short-term job-seeking. Without benefits, people are literally starving. People don’t go to food banks because Waitrose are out of asparagus. They go because the government has snipped away at their benefits until they have become too poor to feed themselves.
The utter hypocrisy of telling disabled people to work themselves out of poverty while cutting Access to Work is so audacious as to be almost impressive. IDS suggests that suitable jobs for disabled workers are constantly popping out of the ground like daisies, despite the fact that his own government closed 36 Remploy factories. If he wants people to work their way out of poverty, he has make it very easy to find that work.
His speech was riddled with odious little snippets digging at those who rely on his department. No one is “simply transferring taxpayers’ money” to claimants, as though every Friday he sits down with his card reader to do some online banking, sneaking into people’s accounts and spiriting their cash away to the scrounging masses. Anyone who has come within ten feet of claiming benefits knows it is far from a simple process.
He is incredulous that if a doctor says you are too sick to work, you get signed off work, as though doctors are untrained apes that somehow gained access to a pen. This is only the latest absurd episode in DWP’s ongoing deep mistrust of the medical profession, whose knowledge of their own patients is often ignored in favour of a brief assessment by an outside agency. IDS implies it is yes-no question that GPs ask; you’re either well enough to work or signed off indefinitely to leech from the state. This is simply not true. GPs can recommend their patients for differing approaches for remaining in work, be it a phased return or adapted circumstances and they do tend to have the advantage over the DWP’s agency of having actually met their patient before.
I have read enough stories of the callous ineptitude of sanctions and cuts starving the people we are meant to be protecting. A robust welfare system is the sign of a society that cares for those in need. We need to provide accessible, suitable jobs for those who can work and accessible, suitable benefits for those who can’t. That truly would be a gift that keeps giving.