Strong US growth undermines Osborne's boast

The Chancellor can no longer boast that the UK grew faster than the US in 2011.

Until recently, one of George Osborne's favourite boasts was that the UK economy had grown more in 2011 than the US. He consistently cited this fact as evidence that austerity, not stimulus, is the way to grow the economy. Here he is writing in the Telegraph in August:

The US economy has grown more slowly than the UK economy so far this year, despite fiscal stimulus in the former and fiscal consolidation in the latter, showing that the problem is not too much fiscal responsibility.

Well, the final results are in and it's not looking good for Osborne. While the UK economy shrank by 0.2 per cent in the fourth quarter of 2011, figures out today show that the US economy grew by 0.7 per cent. Over the year, the UK grew by just 0.8 per cent, while the US grew by 1.7 per cent (see graph), suggesting that the problem may well be too much fiscal responsibility. Worse, in the 15 months since the Spending Review, the US has grown by 2.2 per cent, while the UK has grown by just 0.3 per cent.


The $787bn US stimulus should have been much bigger (see Ryan Lizza's piece in this week's New Yorker for the full story of how Obama's advisers rejected the possibility of a larger stimulus) but it has undoubtedly helped the country to avoid the recession that now confronts the UK.

George Eaton is political editor of the New Statesman.

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PMQs review: Theresa May shows again that Brexit means hard Brexit

The Prime Minister's promise of "an end to free movement" is incompatible with single market membership. 

Theresa May, it is commonly said, has told us nothing about Brexit. At today's PMQs, Jeremy Corbyn ran with this line, demanding that May offer "some clarity". In response, as she has before, May stated what has become her defining aim: "an end to free movement". This vow makes a "hard Brexit" (or "chaotic Brexit" as Corbyn called it) all but inevitable. The EU regards the "four freedoms" (goods, capital, services and people) as indivisible and will not grant the UK an exemption. The risk of empowering eurosceptics elsewhere is too great. Only at the cost of leaving the single market will the UK regain control of immigration.

May sought to open up a dividing line by declaring that "the Labour Party wants to continue with free movement" (it has refused to rule out its continuation). "I want to deliver on the will of the British people, he is trying to frustrate the British people," she said. The problem is determining what the people's will is. Though polls show voters want control of free movement, they also show they want to maintain single market membership. It is not only Boris Johnson who is pro-having cake and pro-eating it. 

Corbyn later revealed that he had been "consulting the great philosophers" as to the meaning of Brexit (a possible explanation for the non-mention of Heathrow, Zac Goldsmith's resignation and May's Goldman Sachs speech). "All I can come up with is Baldrick, who says our cunning plan is to have no plan," he quipped. Without missing a beat, May replied: "I'm interested that [he] chose Baldrick, of course the actor playing Baldrick was a member of the Labour Party, as I recall." (Tony Robinson, a Corbyn critic ("crap leader"), later tweeted that he still is one). "We're going to deliver the best possible deal in goods and services and we're going to deliver an end to free movement," May continued. The problem for her is that the latter aim means that the "best possible deal" may be a long way from the best. 

George Eaton is political editor of the New Statesman.