Memo to Duncan Smith: unlike the UK, the US has recovered from recession

The Work and Pensions Secretary is wrong to criticise the performance of the US economy.

It took some chutzpah for Mitt Romney supporter Iain Duncan Smith to declare on BBC Radio 5 Live last night that it was "very worrying" that the United States hadn't "bounced back from this recession". Unlike the UK, the US has more than recovered from the downturn of 2008-09.

As the graph below shows, while the US has grown consistently since leaving recession in the third quarter of 2009 (with the exception of Q1 2011 when output was flat), Britain has only recently returned to growth after three quarters of contraction. Indeed, by one definition at least, we're still in recession. Unlike the US economy, which is now 2.3 per cent above its pre-recession peak, the UK economy is still 3.1 per cent smaller than it was in the first quarter of 2008. Over the last year, while UK output has remained flat, the US has grown by 2.3 per cent.

The divergence in performance is due in no small part to the decision of the US government to pursue stimulus and the decision of the UK to pursue austerity. Barack Obama's $787bn fiscal stimulus, a mixture of tax cuts, infrastructure projects and increased unemployment benefits, is estimated to have increased real US GDP by around 3.4 per cent and to have created or saved 2.7 million jobs (see this study by Mark Zandi, a former economic adviser to John McCain, and Alan Blinder, a former vice-chairman of the Federal Reserve). By contrast, the coalition's (non-expansionary) fiscal contraction is thought to have reduced GDP by 4.3 per cent this year.

Duncan Smith is welcome to invite comparison of the two economies (not least because it aids the case against the government's policies), but he should know that there can only be one winner.

Barack Obama speaks during a campaign rally in Cincinnati, Ohio. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: André Spicer
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“It’s scary to do it again”: the five-year-old fined £150 for running a lemonade stand

Enforcement officers penalised a child selling home-made lemonade in the street. Her father tells the full story. 

It was a lively Saturday afternoon in east London’s Mile End. Groups of people streamed through residential streets on their way to a music festival in the local park; booming bass could be heard from the surrounding houses.

One five-year-old girl who lived in the area had an idea. She had been to her school’s summer fête recently and looked longingly at the stalls. She loved the idea of setting up her own stall, and today was a good day for it.

“She eventually came round to the idea of selling lemonade,” her father André Spicer tells me. So he and his daughter went to their local shop to buy some lemons. They mixed a few jugs of lemonade, the girl made a fetching A4 sign with some lemons drawn on it – 50p for a small cup, £1 for a large – and they carried a table from home to the end of their road. 

“People suddenly started coming up and buying stuff, pretty quickly, and they were very happy,” Spicer recalls. “People looked overjoyed at this cute little girl on the side of the road – community feel and all that sort of stuff.”

But the heart-warming scene was soon interrupted. After about half an hour of what Spicer describes as “brisk” trade – his daughter’s recipe secret was some mint and a little bit of cucumber, for a “bit of a British touch” – four enforcement officers came striding up to the stand.

Three were in uniform, and one was in plain clothes. One uniformed officer turned the camera on his vest on, and began reciting a legal script at the weeping five-year-old.

“You’re trading without a licence, pursuant to x, y, z act and blah dah dah dah, really going through a script,” Spicer tells me, saying they showed no compassion for his daughter. “This is my job, I’m doing it and that’s it, basically.”

The girl burst into tears the moment they arrived.

“Officials have some degree of intimidation. I’m a grown adult, so I wasn’t super intimidated, but I was a bit shocked,” says Spicer. “But my daughter was intimidated. She started crying straight away.”

As they continued to recite their legalese, her father picked her up to try to comfort her – but that didn’t stop the officers giving her stall a £150 fine and handing them a penalty notice. “TRADING WITHOUT LICENCE,” it screamed.


Picture: André Spicer

“She was crying and repeating, ‘I’ve done a bad thing’,” says Spicer. “As we walked home, I had to try and convince her that it wasn’t her, it wasn’t her fault. It wasn’t her who had done something bad.”

She cried all the way home, and it wasn’t until she watched her favourite film, Brave, that she calmed down. It was then that Spicer suggested next time they would “do it all correctly”, get a permit, and set up another stand.

“No, I don’t want to, it’s a bit scary to do it again,” she replied. Her father hopes that “she’ll be able to get over it”, and that her enterprising spirit will return.

The Council has since apologised and cancelled the fine, and called on its officials to “show common sense and to use their powers sensibly”.

But Spicer felt “there’s a bigger principle here”, and wrote a piece for the Telegraph arguing that children in modern Britain are too restricted.

He would “absolutely” encourage his daughter to set up another stall, and “I’d encourage other people to go and do it as well. It’s a great way to spend a bit of time with the kids in the holidays, and they might learn something.”

A fitting reminder of the great life lesson: when life gives you a fixed penalty notice, make lemonade.

Anoosh Chakelian is senior writer at the New Statesman.