The Osborne effect

Growth is now expected to be just 1.2 per cent in 2011.

Raise VAT to a record high of 20 per cent, spread the myth that Britain is on the "brink of bankruptcy", cut spending before the economy is out of the recovery phase (240,000 public sector jobs have been lost in the past year - three times as many as forecast) and don't be surprised if growth falls away.

The Treasury has just published its round-up of independent growth forecasts and the economy is now expected to grow by just 1.2 per cent this year. The graph below shows how forecasts have been continually revised downwards as growth has plummeted (the economy has grown by just 0.2 per cent in the last nine months).

Average of independent forecasts for 2011 growth

A

Source: Treasury.

Almost every developed country has had to slash its growth forecasts as the global economy has deteriorated but few more so than Britain. Of the G7 countries, only disaster-ravaged Japan has grown more slowly than the UK in the last 12 months. The conclusion is clear: plan A isn't working. The longer George Osborne remains in denial, the harder the eventual U-turn will be.

George Eaton is political editor of the New Statesman.

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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