Don't celebrate too soon, this recovery is dangerously unsustainable

The increase in growth has been driven by rising consumer debt and reverse austerity. Investment and wages remain stagnant.

The dashing Spectator editor, my old adversary Fraser Nelson, is at it again, dissing Ed Balls and Ed Miliband and arguing that all is well with the economy. He is hoping we forget this has been the worst recovery in British history and that only two-thirds of the fall in pre-recession output has been restored. We are five years in and counting, and it is touch and go whether the lost output will have been fully recovered by May 2015.

The risk is that we have been hit by a passing hurricane that will be gone in a flash. The previous nine quarters, three of which were negative, saw little growth at all (0.7%, 0.6% of which was down to the Olympics), followed by three quarters of modest output - 0.4%, 0.7% and 0.8% - and Fraser claims the UK is "off to the races". The economy the coalition inherited, which Cameron, Osborne and Clegg claimed was "bankrupt", grew by exactly the same amount (1.9%) over the first three quarters of 2010 as in the last three. Then austerity was imposed and growth evaporated.

It is true that Markit's three PMIs for construction, manufacturing and services have all been strong, although the British Retail Consortium's report on retail sales, which the PMIs exclude, has been much weaker. Despite this, NIESR is forecasting growth of 1.4% in 2013 and 2% in 2014, while the EU Commission is forecasting growth of 1.3% in 2013, 2.2% in 2014 and 2.4% in 2015. Growth under the Labour government from 1997 Q1 to 2008 Q1 averaged 0.8% a quarter.  Maybe this really is the moment when the economy zooms into life, but I wouldn't bet on it, especially since unemployment is likely to rise. There is absolutely no sign of any real wage growth.

Osborne criticised the last Labour government for going from boom to bust; his response is to inflate another housing bubble that will inevitably implode, leaving the British taxpayer to pick up the tab. House price to earnings ratios are already unsustainably high, especially in London. What goes up must come down, Fraser.

It is clear that the recent rise in growth has been driven by reverse austerity. Government spending has increased and that is what has boosted output. We are now seeing that Ed Balls was completely right - austerity did kill off growth. The recovery we are now experiencing should have occurred in 2010, 2011 and 2012, and would have but for George Osborne's foolishness. A recent study suggested the Chancellor was responsible for lowering GDP by at least 3%; he crashed the car and now wants credit for taking it to the garage for repair.

The other main driver of growth is rising consumer debt and dissaving, triggered by the recent rise in house prices as a result of the absurd Help to Buy scheme. Net trade and investment are not making positive contributions to growth, net business lending especially to SMEs continues to fall, as do real wages. The ONS confirmed this week that underemployment is rising sharply and there is every chance that the unemployment rate will rise again. Indeed, even if there is any growth, it is hard to see it translating into a rise in living standards for the median voter, especially outside London and the south east. Ed Miliband is right to warn that even if there is growth, it is for the few not the many.

Fraser argues that "when you think about all the cash that companies have been hoarding, too fearful to invest it, then there's a good chance that success will breed success as corporations reopen their wallets". But it is unclear why firms will actually start committing long-term UK investment with a slowing US economy, a flat-lining eurozone, and uncertainty over Britain's EU membership.

Don't celebrate too soon, Fraser.  If the next three quarters in a row have growth of more than 2%, I will buy you a very nice dinner; if not, you owe me. It does look to me like a light zephyr. Let's hope for everyone's sake I am wrong.

George Osborne inspects material during a visit to AW Hainsworth and Sons on October 25, 2013 in Leeds. Photograph: Getty Images.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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Andy Burnham and Sadiq Khan are both slippery self-mythologisers – so why do we rate one more than the other?

Their obsessions with their childhoods have both become punchlines; but one of these jokes, it feels to me, is told with a lot more affection than the other.

Andy Burnham is a man whose policies and opinions seem to owe more to political expediency than they do to belief. He bangs on to the point of tedium about his own class, background and interests. As a result he’s widely seen as an unprincipled flip-flopper.

Sadiq Khan is a man whose policies and opinions seem to owe more to political expediency than they do to belief. He bangs on to the point of tedium about his own class, background and interests. As a result he’s the hugely popular mayor of London, the voice of those who’d be proud to think of themselves as the metropolitan liberal elite, and is even talked of as a possible future leader of the Labour party.

Oh, and also they were both born in 1970. So that’s a thing they have in common, too.

Why it is this approach to politics should have worked so much better for the mayor of London than the would-be mayor of Manchester is something I’ve been trying to work out for a while. There are definite parallels between Burnham’s attempts to present himself as a normal northern bloke who likes normal things like football, and Sadiq’s endless reminders that he’s a sarf London geezer whose dad drove a bus. They’ve both become punchlines; but one of these jokes, it feels to me, is told with a lot more affection than the other.

And yes, Burnham apparent tendency to switch sides, on everything from NHS privatisation to the 2015 welfare vote to the leadership of Jeremy Corbyn, has given him a reputation for slipperiness. But Sadiq’s core campaign pledge was to freeze London transport fares; everyone said it was nonsense, and true to form it was, and you’d be hard pressed to find an observer who thought this an atypical lapse on the mayor’s part. (Khan, too, has switched sides on the matter of Jeremy Corbyn.)

 And yet, he seems to get away with this, in a way that Burnham doesn’t. His low-level duplicity is factored in, and it’s hard to judge him for it because, well, it’s just what he’s like, isn’t it? For a long time, the Tory leadership’s line on London’s last mayor was “Boris is Boris”, meaning, look, we don’t trust him either, but what you gonna do? Well: Sadiq is Sadiq.

Even the names we refer to them by suggest that one of these two guys is viewed very differently from the other. I’ve instinctively slipped into referring to the mayor of London by his first name: he’s always Sadiq, not Khan, just as his predecessors were Boris and Ken. But, despite Eoin Clarke’s brief attempt to promote his 2015 leadership campaign with a twitter feed called “Labour Andy”, Burnham is still Burnham: formal, not familiar. 

I’ve a few theories to explain all this, though I’ve no idea which is correct. For a while I’ve assumed it’s about sincerity. When Sadiq Khan mentions his dad’s bus for the 257th time in a day, he does it with a wink to the audience, making a crack about the fact he won’t stop going on about it. That way, the message gets through to the punters at home who are only half listening, but the bored lobby hacks who’ve heard this routine two dozen times before feel they’re in the joke.

Burnham, it seems to me, lacks this lightness of touch: when he won’t stop banging on about the fact he grew up in the north, it feels uncomfortably like he means it. And to take yourself seriously in politics is sometimes to invite others to make jokes at your expense.

Then again, perhaps the problem is that Burnham isn’t quite sincere enough. Sadiq Khan genuinely is the son of a bus-driving immigrant: he may keep going on about it, but it is at least true. Burnham’s “just a northern lad” narrative is true, too, but excludes some crucial facts: that he went to Cambridge, and was working in Parliament aged 24. Perhaps that shouldn’t change how we interpret his story; but I fear, nonetheless, it does.

Maybe that’s not it, though: maybe I’m just another London media snob. Because Burnham did grow up at the disadvantaged end of the country, a region where, for too many people, chasing opportunities means leaving. The idea London is a city where the son of a bus driver can become mayor flatters our metropolitan self-image; the idea that a northerner who wants to build a career in politics has to head south at the earliest opportunity does the opposite. 

So if we roll our eyes when Burnham talks about the north, perhaps that reflects badly on us, not him: the opposite of northern chippiness is southern snobbery.

There’s one last possibility for why we may rate Sadiq Khan more highly than Andy Burnham: Sadiq Khan won. We can titter a little at the jokes and the fibs but he is, nonetheless, mayor of London. Andy Burnham is just the bloke who lost two Labour leadership campaigns.

At least – for now. In six weeks time, he’s highly likely to the first mayor of Greater Manchester. Slipperiness is not the worst quality in a mayor; and so much of the job will be about banging the drum for the city, and the region, that Burnham’s tendency to wear his northernness on his sleeve will be a positive boon.

Sadiq Khan’s stature has grown because the fact he became London’s mayor seems to say something, about the kind of city London is and the kind we want it to be. Perhaps, after May, Andy Burnham can do the same for the north – and the north can do the same for Andy Burnham.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.