The UK economy hasn't grown more than the US

The US has grown by 2.3 per cent in the last year, while the UK has remained flat.

The final set of US growth figures before the presidential election were released today, showing that the economy grew at an annual rate of 2 per cent in the third quarter or a quarterly rate of 0.5 per cent. The Tories, unsurprisingly, are keen to point out that that's a worse performance than the UK, which, as we learned yesterday, grew at a quarterly rate of 1 per cent in Q3.  But they would be wise not to invite too much comparison of the UK and US economies.

First, while the US has grown by 2.3 per cent over the last year, the UK economy has failed to grow at all. As the Office for National Statistics reported yesterday: "GDP in volume terms was estimated to have been flat in Q3 2012, when compared with Q3 2011".

Second, while the US economy is now 2.3 per cent above its pre-recession peak, the UK remains 3.1 per cent below. The US has grown for 13 consecutive quarters, but we've only just recovered the output lost in the double-dip recession (a fate that the US, partly thanks to a policy of stimulus, rather than austerity, avoided). As a result, while they've grown by 3.9 per cent over the last two years, we've grown by just 0.6 per cent.

Finally, since the UK Q3 figure was artificially inflated by the bounce-back from the extra bank holiday in June (responsible for around half of the 1 per cent growth) and the inclusion of the Olympic ticket sales (responsible for 0.2 per cent), it's foolish of the Treasury to cite it as proof that we're "on the right track". Indeed, as I wrote yesterday, a significant number of forecasters believe it's possible or even probable that the economy will shrink in quarter four. Rather than complacently boasting about a one-off surge in growth, the Tories should be acting to prevent a triple-dip recession.

The US economy is now 2.3 per cent above its pre-recession peak, while the UK remains 3.1 per cent below. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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