GDP figures: a reaction round-up

"The government is failing to get public spending under control."

GDP fell 0.3 per cent in the last quarter of 2012. Although markets held relatively steady, the Sterling plummeted, and economists are warning that the UK is in danger of losing its AAA rating:

Charles Levy, senior economist at The Work Foundation:

Following three years of a flat economy, today's GDP figures confirm that our economy is again contracting, raising the prospect of a triple dip recession. 2012 saw considerable improvements in the labour market, with over half a million new jobs created, though many part-time. However, without growth even this improvement will be hard to sustain.

Mark Littlewood, Director General at the Institute of Economic Affairs:

These figures are clearly very disappointing. If the government does indeed have a strategy for growth, it plainly isn't working.

The government's independent forecaster had predicted the economy would be growing by about 2 per cent or 3 per cent by now. In fact, it is flatlining or even slipping backwards into a triple dip recession.

The government is failing to get public spending under control. This year alone, George Osborne will add £4,000 to the national debt for each and every British household. Far from a programme of austerity, the coalition are running up collossal budget deficits.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club:

Today's GDP figures are right at the lower end of our expectations. The manufacturing and services figures came in pretty much where we expected them to but the construction outturn is very disappointing in the context of the monthly data that has already been published. Construction output must have collapsed in December to get such a small boost over the quarter as a whole.

The extraction sector also continues to exert a major drag. Where oil production was once a major support to UK activity, the sector is declining rapidly and the Q4 collapse means that output has now fallen by almost 40% over the past five years. This is having a significant impact on the GDP figures, the excluding oil measure is just over 2% short of previous peaks, in contrast to the 3.5% shortfall for GDP.

Nawaz Ali, UK Market Analyst for Western Union Business Solutions:

Britain's bigger-than-expected economic slump may now force the central bank to re-open its stimulus cupboard as soon as next month. Governor King may even reach for something unexpected in order to eliminate the risk of a triple-dip recession.

Meanwhile, Chancellor George Osborne could also bow to pressure from austerity-doves in his March budget update, but will also be well aware that Britain is now a step closer to losing its triple-A ratings crown.

The pound is falling sharply in global currency markets after the figures reinforced views that 2012 was a "lost year" for UK growth.

Frances O'Grady from the TUC:

Today's figures confirm our worst fears that the Chancellor's austerity plan has pushed the UK economy to the brink of an unprecedented triple-dip recession.

We are now mid-way through the coalition's term of office
and its economic strategy has been a complete disaster. The economy has grown by just 1%, real wages have fallen, and the manufacturing and construction sectors have shrunk. We remain as dependent on the City as we did before the financial crash.

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How Theresa May is trying to trap her opponents over Brexit

An amendment calling on MPs to "respect" the referendum outcome is ammunition for the battles to come. 

Theresa May is making a habit of avoiding unnecessary defeats. In the Richmond Park by-election, where the Liberal Democrats triumphed, the Conservatives chose not to stand a candidate. In parliament, they today accepted a Labour motion calling on the government to publish a "plan for leaving the EU" before Article 50 is triggered. The Tories gave way after as many as 40 of their number threatened to vote with the opposition tomorrow. Labour's motion has no legal standing but May has avoided a symbolic defeat.

She has also done so at little cost. Labour's motion is sufficiently vague to allow the government to avoid publishing a full plan (and nothing close to a White Paper). Significantly, the Tories added an amendment stating that "this House will respect the wishes of the United Kingdom as expressed in the referendum on 23 June; and further calls on the Government to invoke Article 50 by 31 March 2017". 

For No.10, this is ammunition for the battles to come. If, as expected, the Supreme Court rules that parliament must vote on whether to trigger Article 50, Labour and others will table amendments to the resulting bill. Among other things, these would call for the government to seek full access to the single market. May, who has pledged to control EU immigration, has so far avoided this pledge. And with good reason. At the Christian Democrat conference in Germany today, Angela Merkel restated what has long been Europe's position: "We will not allow any cherry picking. The four basic freedoms must be safeguarded - freedom of movement for people, goods, services and financial market products. Only then can there be access to the single market."

There is no parliamentary majority for blocking Brexit (MPs will vote for Article 50 if the amendments fall). But there is one for single market membership. Remain supporters insist that the 23 June result imposed no conditions. But May, and most Leavers, assert that free movement must be controlled (as the Out campaign promised). 

At the moment of confrontation, the Conservatives will argue that respecting the result means not binding their hands. When MPs argue otherwise, expect them to point to tomorrow's vote. One senior Labour MP confessed that he would not vote for single market membership if it was framed as "disrespecting Brexit". The question for May is how many will prove more obstructive. 

George Eaton is political editor of the New Statesman.