Thursday 29 March 2012

Telegraph: Plan A Has Failed

With my emphasis added, Daniel Knowles writes:

That's the news from the OECD, anyway. They've published their estimate of how much the British economy grew by in the first quarter of this year, and, well, it didn't grow at all. It shrank. If their estimates are confirmed when the Office for National Statistics publishes its own first estimate next month, then we will officially have entered a double-dip recession. And to think that, just a few weeks ago, there were whispers about "green shoots".

This is bad news for George Osborne's reelection strategy. The Coalition's plan called for austerity now, and the nation was fully prepared for two or three years of falling incomes. But this will make it clear what we were told in the Autumn statement: we face perhaps another four or five years of pain. In the entire time since the Chancellor came to No 10 in the spring of 2010, the economy has grown by a total of about 0.6 per cent of GDP. That's less than it grew in the last quarter of Alistair Darling's time in No 11.

Of course, it's debatable how much this is George Osborne's fault. His tax rises and austerity have certainly lowered the rate of growth, but not by nearly as much as it has fallen. Rather, the cold wind has come from abroad. Our main export market is the eurozone, where mass, German-enforced austerity is sucking demand out of the system. Despite a 30 per cent devaluation of our currency, our balance of trade with Europe has barely changed in two years – mostly thanks to the EU's downturn.

But as the Conservatives demonstrated so effectively when Gordon Brown was in power, that excuse won't necessarily work. And when the newspapers and broadcasters are screaming "double-dip recession", voters may be less forgiving of the Chancellor's failure to meet his targets.


  1. Young Knowles could do with someone half as old again to direct him to a fully formed political philosophy. He is well on the way. Has he read Confessions of an Old Labour High Tory, testament of a generation?