Britain is still in the growth slow lane

Only Cyprus, Greece and Portugal have grown at a slower rate than the UK.

Growth figures for most major European economies have been published today, so how do they compare with the UK's? Both France and Germany grew at a similar rate to Britain in the third quarter of this year, expanding by 0.4 per cent and 0.5 per cent respectively, a point you can expect George Osborne to make repeatedly over the coming weeks.

But if we look at growth over the last 12 months (see the final column on the Eurostat chart), the comparison isn't such a happy one. While Germany has grown by 2.6 per cent and France has grown by 1.6 per cent, Britain has grown by just 0.5 per cent (-0.5 per cent in Q4 2010, 0.4 per cent in Q1, 0.1 per cent in Q2 and 0.5 per cent in Q3), a slower rate of growth than ever EU country expect Cyprus, Greece and Portugal. It's a reminder that, contrary to Osborne, the economy was flatlining even before the current crisis began. In fact, the current crisis won't begin to have a significant effect on growth until the fourth quarter, when growth is likely to be flat or worse.


The uncomfortable truth is that Osborne's Britain has one of the lowest rates of growth in Europe and one of the highest rates of inflation. This is not a recovery worthy of the name.

Postscript: What about the US, you ask? Will Straw crunched the numbers on The Staggers earlier this month and showed that the American economy has grown by 1.6 per cent over the last year, more than three times the speed of the UK.

George Eaton is political editor of the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.