The Staggers

The New Statesman’s rolling politics blog

The Bank of England warns Osborne: prepare for a triple-dip recession

Osborne said the economy was "on the right track" but the Bank warns growth could disappear in Q4.

By George Eaton Published 14 November 2012 12:41

Chancellor George Osborne. Photograph: Getty Images.

George Osborne at an EU Economy and Finance Council meeting in Luxembourg. Photograph: Getty Images.

It was always unwise for George Osborne to cite the most recent set of growth figures as proof that "we're on the right track", principally because the good news is unlikely to last. Growth in quarter three, which stood at one per cent, was artificially inflated by the Olympics (which added 0.2 per cent to growth) and by the bounce back from the Jubilee bank holiday (which added 0.5 per cent). There was, as I wrote when the figures were published, a strong chance of a contraction in the fourth quarter.

Now the Bank of England has become the latest forecaster to warn of the possibility of a triple-dip recession. In its quarterly inflation report, it notes that

Headline outturns for GDP in 2012 have been, and will continue to be, volatile, with the data buffeted by one-off influences such as the Jubilee and the Olympics. In Q3, output increased by 1%. In Q4, that growth rate seems set to fall sharply as the boost from the Olympics is reversed; indeed, output may post a small decline [emphasis mine].

Having claimed that the economy is "healing", Osborne will struggle to explain why the patient has taken another turn for the worse.

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Tags: George Osborne Economy

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12 comments

Wed, 2012-11-21 19:02 — mike555

We could just borrow and spend a load more money, or maybe just print another 375 billion, it makes you wonder why anyone ever has any economic problems when the answer is so easy(sarcasm - in case Fox is confused).

Thu, 2012-11-15 15:31 — Barrie J (not verified)

George Osborne, wasn't this the man recently described by a Financial Times' journalist as a 'strategic genius'?
I suppose in these days of mass hyperbole, where David Beckam lighting an Olympic Torch can be spoken of as a 'miraculous sight', describing George Osborne as a strategic genius really means he puts his trousers on before his underpants.
We need a healthy injection of democracy here and quickly.

Thu, 2012-11-15 02:03 — mamamia (not verified)

This is the fault of public sector workers, middle to low income families, the disabled, the unemployed, the children of the families that are being squeezed. It has nothing to do with Osborne and his policies as he is not doing Economics any more! He is now a social guru!!! Some rich seem to be doing OK out of the public purse though!!! Perhaps this has been the plan all along ?!?

Wed, 2012-11-14 20:50 — nourredine

@ Indu Pendent,
Wok up and smell the burning , Europe is burning and you only found that the coalition is maintaining the growth to 0%.
The only job they can create are part-time or temporaly job that is all.
Be logical and inform yourself before i said it and i will say it to you stop your verbal diharrea

Wed, 2012-11-14 20:37 — RomeStatesman (not verified)

For all of you commentators on the economy: there's the reality check called vitanomics - the revolutionary antithesis to economics - that's going to ambush you sooner rather than later.

It's the legacy less exposition of the economy and its moral dimension.

Wed, 2012-11-14 19:29 — Indu Pendent

Said it before, the Coalition are managing the economy to keep growth as close to 0% as possible. If growth picks up so will reduce the structural deficit quicker. If growth goes negative they will increase the stimulus.

A silver lining is that inflation is rising whilst wages remained subdued. It continues to realing the relative cost of UK labor with world rates which is improving the competitiveness of the economy. This will create jobs.

Thu, 2012-11-15 22:28 — matthew fox (not verified)

If growth picks up, well according to the OBR, Plan A would produce annualised growth of 2.8%, are we on track.

No mention of the borrowing post 2015 Inastew, the clock is ticking.

Thu, 2012-11-15 01:13 — Delphic Dave (not verified)

Indu,

The game is very nearly up. Your silver lining is the very thing that threatens the economy, namely inflation.

I don't understand your thinking that they are managing the economy to keep zero growth, it was neither what they predicted nor what they want (or need if it comes to that).

Nor do I understand your claim that 'they will increase the stimulus' - there is no stimulus.

Is the reason you call yourself indu pendant based on you not living on the same planet as the rest of us.

I'm genuinely interested to know.

Wed, 2012-11-14 18:53 — nourredine

@Eugene Greco,
He is also known Mr TINA (There Is No Alternative)

Wed, 2012-11-14 16:12 — kenelmist (not verified)

Blaming children, the poor, disabled, unemployed, and of course immigrants. Who is left to blame? Only ourselves, for tolerating the stupid and zealots in power, and failing to revolt.