The Staggers

The New Statesman’s rolling politics blog

The good and bad news for Osborne in today's GDP figures

The economy grew by even less than thought in 2011. But there is an upside for Osborne.

By George Eaton Published 24 February 2012 13:03

It turns out that the economy grew by even less than thought last year. The ONS left growth for the final quarter of 2011 unrevised at -0.2 per cent but downgraded Q3 growth to 0.5 per cent (down from 0.6 per cent) and Q1 growth to 0.3 per cent (down from 0.4 per cent).These revisions mean that total growth for 2011 was just 0.8 per cent, compared with 2.1 per cent in 2010, one of the worst performances in the EU.

If there is an upside for George Osborne, it is that the unrevised Q4 figure increases the chances of a bounce back in this quarter. This would allow the Chancellor to avoid a double-dip recession - defined as two consecutive quarters of negative growth. Indeed, all the recent data, such as the unexpectedly strong retail sales figures, suggests that the economy is experiencing a modest recovery. Mervyn King's prediction of a "zig-zag" this year, with the economy alternating between positive and negative growth, looks likely to be borne out.

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Tags: George Osborne

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10 comments

Sat, 2012-02-25 12:39 — Indu Pendent (not verified)

@livers

We can always find reasons to spend money. What we cant afford we cant have.

Sat, 2012-02-25 13:30 — Livers (not verified)

@Indu Pendent

Tell that to the pensioner who is freezing and the homeless single parent or the millions kids without a job.

Then tell them about RBS bonuses and Cameron's lovely kitchen.

There are always choices.

Fri, 2012-02-24 19:49 — Indu Pendent (not verified)

@GeorgeE

I guess its just an oversight but you did not mention the UK has one of the highest deficits in Europe, an over bloated state and massive debt. Thus breaking even or growing a little as a bonus AND cutting the deficit AND cutting taxes is impressive of the coalition. Perhaps you should say so?

Do you think Plan B and Plan A lite are dead? May be Plan A+ is the only credible option left for the Labour team (cuts with investment).

Fri, 2012-02-24 20:37 — Patrick Hadley

In his first budget in June 2010 Osborne predicted growth for 2011 to be 2.3%. In last year's budget he cut that figure to 1.7%. Now we know that it was only 0.8%

Last March Osborne was boasting about how his policies had led to higher growth in the UK than in America. I have not heard him repeat that recently.

Sat, 2012-02-25 20:59 — mike555

It's a shame the house price / debt boom post 97, which people were warning about years before the credit crunch, wasn't stopped. That's at the root of our problems.

I don't think things would have been much different under the Tories either for those who are too small minded to think of anything other than Labour vs Tory.

Fri, 2012-02-24 23:31 — matthew fox (not verified)

Inastew, when will the UK catch up with the US, didn't you say it was only month's away?

Fri, 2012-02-24 13:40 — Livers (not verified)

Who are our peers? Who do we compare ourselves against?

A focus on qtr by qtr GDP growth trends is interesting but the real question should be: How is Britain performing compared to the rest of the world.

I think that comparison is more enlightening -- i.e. what is GO's performance when compared to his peers globally for the last 18 months?

Fri, 2012-02-24 14:06 — Lucidus (not verified)

Osborne has only implemented about 12% of his cuts so far: the other 88% are in the pipeline.

Prospects for growth seem poor.

Sat, 2012-02-25 11:05 — Livers (not verified)

@Indu Pendent

I guess you forgot to mention that we suffered the worst global recession for a century and recovery is now stalled.

Its not a 'bloated' state, its a warped demographic; more people over 65 than under 24, increasing unemployed (or part-time employed) requiring support to "enjoy" a basic living standard. All this puts a burden on the state.

But the Tories want to rein that in whilst stigmatising the very people they made unemployed as feckless and lazy.

All in this together -- my fucking arse.