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.

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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.

How Jim Murphy's mistake cost Labour - and helped make Ruth Davidson

Scottish Labour's former leader's great mistake was to run away from Labour's Scottish referendum, not on it.

The strange revival of Conservative Scotland? Another poll from north of the border, this time from the Times and YouGov, shows the Tories experiencing a revival in Scotland, up to 28 per cent of the vote, enough to net seven extra seats from the SNP.

Adding to the Nationalists’ misery, according to the same poll, they would lose East Dunbartonshire to the Liberal Democrats, reducing their strength in the Commons to a still-formidable 47 seats.

It could be worse than the polls suggest, however. In the elections to the Scottish Parliament last year, parties which backed a No vote in the referendum did better in the first-past-the-post seats than the polls would have suggested – thanks to tactical voting by No voters, who backed whichever party had the best chance of beating the SNP.

The strategic insight of Ruth Davidson, the Conservative leader in Scotland, was to to recast her party as the loudest defender of the Union between Scotland and the rest of the United Kingdom. She has absorbed large chunks of that vote from the Liberal Democrats and Labour, but, paradoxically, at the Holyrood elections at least, the “Unionist coalition” she assembled helped those parties even though it cost the vote share.

The big thing to watch is not just where the parties of the Union make gains, but where they successfully form strong second-places against whoever the strongest pro-Union party is.

Davidson’s popularity and eye for a good photo opportunity – which came first is an interesting question – mean that the natural benefactor in most places will likely be the Tories.

But it could have been very different. The first politician to hit successfully upon the “last defender of the Union” routine was Ian Murray, the last Labour MP in Scotland, who squeezed both the  Liberal Democrat and Conservative vote in his seat of Edinburgh South.

His then-leader in Scotland, Jim Murphy, had a different idea. He fought the election in 2015 to the SNP’s left, with the slogan of “Whether you’re Yes, or No, the Tories have got to go”.  There were a couple of problems with that approach, as one  former staffer put it: “Firstly, the SNP weren’t going to put the Tories in, and everyone knew it. Secondly, no-one but us wanted to move on [from the referendum]”.

Then again under different leadership, this time under Kezia Dugdale, Scottish Labour once again fought a campaign explicitly to the left of the SNP, promising to increase taxation to blunt cuts devolved from Westminster, and an agnostic position on the referendum. Dugdale said she’d be open to voting to leave the United Kingdom if Britain left the European Union. Senior Scottish Labour figures flirted with the idea that the party might be neutral in a forthcoming election. Once again, the party tried to move on – but no-one else wanted to move on.

How different things might be if instead of running away from their referendum campaign, Jim Murphy had run towards it in 2015. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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