Support 100 years of independent journalism.

  1. Business
  2. Economics
27 January 2012updated 22 Oct 2020 3:55pm

Strong US growth undermines Osborne’s boast

The Chancellor can no longer boast that the UK grew faster than the US in 2011.

By George Eaton

Until recently, one of George Osborne’s favourite boasts was that the UK economy had grown more in 2011 than the US. He consistently cited this fact as evidence that austerity, not stimulus, is the way to grow the economy. Here he is writing in the Telegraph in August:

The US economy has grown more slowly than the UK economy so far this year, despite fiscal stimulus in the former and fiscal consolidation in the latter, showing that the problem is not too much fiscal responsibility.

Well, the final results are in and it’s not looking good for Osborne. While the UK economy shrank by 0.2 per cent in the fourth quarter of 2011, figures out today show that the US economy grew by 0.7 per cent. Over the year, the UK grew by just 0.8 per cent, while the US grew by 1.7 per cent (see graph), suggesting that the problem may well be too much fiscal responsibility. Worse, in the 15 months since the Spending Review, the US has grown by 2.2 per cent, while the UK has grown by just 0.3 per cent.

A

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s global affairs newsletter, every Monday and Friday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy

The $787bn US stimulus should have been much bigger (see Ryan Lizza’s piece in this week’s New Yorker for the full story of how Obama’s advisers rejected the possibility of a larger stimulus) but it has undoubtedly helped the country to avoid the recession that now confronts the UK.