What George Osborne doesn't want you to know about the economy

Including, this is still the slowest recovery for 100 years, the economy is 2.9% smaller and most people are still getting poorer.

After the economy grew for two consecutive quarters and growth forecasts were revised from the terrible to the merely mediocre, George Osborne has decided it's time to declare victory. In his speech earlier today in east London, the Chancellor claimed that "those in favour of a Plan B have lost the argument" and that Britain was "turning the corner". The media, most of which endorsed austerity in 2010, has every interest in echoing his words. But here are five reasons why it's still the Chancellor and his supporters who have all the explaining to do. 

1. This is still the slowest recovery for more than a century

Growth has returned - it was always bound to at some point (and no Keynesian ever suggested otherwise) - but this remains the slowest recovery for more than 100 years. Had Osborne achieved the OBR's original June 2010 forecasts, the economy would now be 8.1% larger. Instead, after a collapse in private and public investment, it's only 4% larger. To make up the lost ground since 2010, the economy would need to grow at 1.3% a quarter for the next two years. Output of 0.7% is the least we should expect (not least when the population is growing). 

2. The economy is 2.9% smaller than before the crash (the US is 4.5% larger)

Owing to three years of anaemic growth, the economy is still 2.9% below its pre-recession peak. In the US, by contrast, where the Obama administration maintained fiscal stimulus, the economy is 4.5% larger than in 2007 after growth three times greater than that of the UK since autumn 2010. And it's not just the Americans who have outpaced us. The UK recovery has been slower that of any other G7 country bar Italy. 

3. Unemployment hasn't fallen for six months and underemployment is at a near-record high

Before the economy returned to growth, the Tories were hailing employment as this government's success story (as they did when the most recent were published). But the data, as so often, tells a different story. After falling from 8.4% to 7.7% between November 2011 and November 2012, the headline rate of unemployment has been stuck at around 7.8% for the last six months, 0.1% higher than its previous low.

That total joblessness has not risen to the heights experienced in the 1980s owes more to the willingness of workers to price themselves into employment (real wages have fallen by a near-unprecedented 9%) than the success of the government's strategy.  

Alongside this, underemployment is surging, with a record 1.43m in part-time jobs because they can't find full-time work. Worst of all, long-term unemployment (those out of work for more than a year) is at a near-record high and youth unemployment is at 973,000 (21.4%).

4.  His deficit reduction plan failed and he's forecast to borrow £245bn more

For a man whose raison d'etre is deficit reduction ("The deficit reduction programme takes precedence over any of the other measures in this agreement," states the Coalition Agreement), Osborne isn't very good at it. Having originally pledged to eliminate the structural deficit by 2014-15 and ensure that debt is falling as a proportion of GDP by 2015-16, he's been forced to push both targets back to 2017-18.

Contrary to what some on the right claim, this isn't due to any lack of austerity. Infrastructure spending has been slashed by 42%, VAT has been increased to 20% and 356,000 public sector jobs have been cut, so that the state workforce is now at its lowest level since 1999. Despite all this, Osborne is still forecast to borrow £245bn more than planned across this parliament and more in five years than Labour did in 13. 

5. Most people are still getting poorer - and that won't change soon

While the media and the political class fixate over GDP, it's a poor measure of the nation's economic health. As we saw even before the crash, a growing economy can disguise stagnating or falling wages for the majority. Between April and June, average weekly earnings (excluding bonuses) rose by just 1.1% compared with a year earlier, 1.7 percentage points below the rate of inflation (2.8%). Since the election, average pay has fallen by £1,350 a year in real terms, with most now earning no more than they were in 2003, a worse performance than every EU country except Portugal, the Netherlands and Greece.

And the situation is unlikely to improve anytime soon. Wages aren't expected to outstrip inflation until 2015 at the earliest and earnings for low and middle income families won't reach pre-recession levels until 2023

George Osborne takes part in a panel session on the main stage at the Campus Party computer coding event at the 02 on September 4, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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The 4 most unfortunate Nazi-EU comparisons made by Brexiteers

Don't mention the war.

On Tuesday morning, the Prime Minister Theresa May made her overtures to Europe. Britain wanted to be, she declared “the best friend and neighbour to our European partners”.

But on the other side of the world, her Foreign secretary was stirring up trouble. Boris Johnson, on a trade mission to India, said of the French President:

“If Mr Hollande wants to administer punishment beatings to anybody who seeks to escape [the EU], in the manner of some World War Two movie, I don't think that is the way forward, and it's not in the interests of our friends and partners.”

His comments were widely condemned, with EU Brexit negotiator Guy Verhofstadt calling them “abhorrent”.

David Davis, the Brexit secretary, then piled in with the declaration: “If we can cope with World War Two, we can cope with this."

But this isn’t the first time the Brexiteers seemed to be under the impression they are part of a historical re-enactment society. Here are some of the others:

1. When Michael Gove compared economist to Nazis

During the EU referendum campaign, when economic organisation after economic organisation predicted a dire financial hangover from Brexit, the arch-Leaver Tory MP is best known for his retort that people “have had enough of experts”.

But Gove also compared economic experts to the Nazi scientists who denounced Albert Einstein in the 1930s, adding “they got 100 German scientists in the pay of the government to say he was wrong”. 

(For the record, the major forecasts came from a mixture of private companies, internationally-based organisations, and charities, as well as the Treasury).

Gove later apologised for his “clumsy” historical analogy. But perhaps his new chum, Donald Trump, took note. In a recent tweet attacking the US intelligence agencies, he demanded: “Are we living in Nazi Germany?”

2. When Leave supporters channelled Basil Fawlty

Drivers in Oxfordshire had their journey interrupted by billboards declaring: “Halt Ze German Advance! Vote Leave”. 

The posters used the same logo as the Vote Leave campaign – although as the outcry spread Vote Leave denied it had anything to do with it. Back in the 1970s, all-Germans-are-Nazi views were already so tired that Fawlty Towers made a whole episode mocking them.

Which is just as well, because the idea of the Nazis achieving their evil empire through tedious regulatory standards directives and co-operation with French socialists is a bunch of bendy bananas.   

3. When Boris Johnson said the EU shared aims with Hitler

Saying that, Boris Johnson (him again) still thinks there’s a comparison to be had. 

In May, Johnson told the Telegraph that while Brussels bureaucrats are using “different methods” to Hitler, they both aim to create a European superstate with Germany at its heart.

Hitler wanted to unite the German-speaking peoples, invade Eastern Europe and enslave its people, and murder the European Jews. He embraced violence and a totalitarian society. 

The European Union was designed to prevent another World War, protect the rights of minorities and smaller nations, and embrace the tedium of day-long meetings about standardised mortgage fact sheets.

Also, as this uncanny Johnson lookalike declared in the Telegraph in 2013, Germany is “wunderbar” and there is “nothing to fear”.

4. When this Ukip candidate quoted Mein Kampf

In 2015, Kim Rose, a Ukip candidate in Southampton, decided to prove his point that the EU was a monstrosity by quoting from a well-known book.

The author recommended that “the best way to take control” over a people was to erode it “by a thousand tine and almost imperceptible reductions”.

Oh, and the book was Mein Kampf, Hitler's erratic, rambling, anti-Semitic pre-internet conspiracy theory. As Rose explained: “My dad’s mother was Jewish. Hitler was evil, I'm just saying the EU is evil as well.”
 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.