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Confirmation has come through from the Office for National Statistics that the UK economy shrank in the last months of 2012.
It’s no surprise – you only had to look at the shop sales figures for December to know that something was going wrong.
The poor performance has negated the effects of the growth bump in the previous quarter, when the economy improved by 0.9 per cent, boosted by the London Olympics.
The official Treasury line is: “While the economy is healing, it is a difficult road.” Healing? Total growth for the whole of 2012 has flatlined. Again. If the economy was a hospital patient it would need a sharp electric shock to get it going again (but we’ll come back to that)!
The total economic growth since the Conservative-led Coalition government came into power is 0.4 per cent; less than that recorded during the first quarter of the Parliament when the government was still working under Labour Chancellor Alistair Darling’s spending rules.
“Today’s GDP figures are extremely disappointing, but not surprising. We warned the UK Govt their cuts were too deep, too fast,” said Carwyn Jones, the Welsh Government’s First Minister.
“UK Government cuts to capital investment in major infrastructure projects is causing damage to our economy. A new plan for growth and jobs should now be a major priority for the Prime Minister and the Chancellor of the Exchequer.”
Economist Danny Blanchflower tweeted: “-0.3% lack of growth comes as no surprise but is appalling this was made in #11 Downing Street. The question is what is Slasher going to do?
“Given that the coalition in June 10 predicted growth would be +6 per cent and we now have +0.3 per cent we are entitled to know what went wrong. One-twentieth won’t do.”
Sky News ran with this: “Osborne says Britain faces a difficult economic situation and that he will confront problems to create jobs.”
Comedy Prime Minister David Cameron received early warning of the figures, and responded by having a slap-up meal with his Bullingdon chums
Gideon George Osborne (the man responsible for the mess) and London’s comedy mayor Boris ‘zipwire’ Johnson.
Osborne later responded: “We can either run away from these problems or confront them, and I am determined to confront them so that we go on creating jobs for the people of this country.” What jobs?
In fact, this is the very predictable result of the Conservatives’ ideology-led dogma, that put a project to shrink the state ahead of prosperity.
The Tories have always wanted to pin the blame for our debt woes on the state. They suggest that we are in crisis because public spending got out of control, and that this is what happens when the state gets too big.
But this is a fantasy, unsupported by any sound economic analysis and designed to pursue a reckless plan that puts the economy and long-term recovery at risk.
The image of a bloated state getting fatter on taxpayers’ money while crowding out a budding private sector is nothing but propaganda, and here’s why: Before the credit crunch, public sector debt was less than 40 per cent of national income – it was the private corporate sector that was out of control, with debt at almost 300 per cent of national income.
The Tories wanted to say the private sector was being crowded out by the public sector, but in fact, it was being propped up by it.
Those of us who listened to the experts knew that cutting would make things worse, rather than better, but we heard yesterday that Osborne is now ignoring the advice of his former bosom-buddies at the IMF and intends to keep chopping away at the carcass, presumably until there’s nothing left at all.
The same experts, last year, were warning of a double-dip recession – or what legendary economist John Maynard Keynes called the “death spiral”. Now we’re facing a TRIPLE-dip. We haven’t just entered the death spiral; we’re well into it!
Osborne’s solution is to cut benefits and wages so that people have less money to spend on the UK economy. With less money in circulation, shops will close and businesses will go to the wall. Foreign investors will turn away from a nation where they will see there is no profit to be gained. Creditors will start to worry and our credit rating will suffer. By the next election in 2015, there may not be any life in UK business worth mentioning.
Does anyone remember when David Cameron said, “The good news will keep on coming”?
He’s a public relations man, you see. His skill is in saying the opposite of what he means, in order to make a message palatable to the public. You could say he’s not very good at it, because his greatest feat was to persuade the British public to reject his Conservatism a little less harshly than that if all the other Tory leaders since John Major – which is what made it possible for him and Osborne to put us all in this mess by forming a dirty backroom deal with the Liberal Democrats.
I’d like to talk to some of the people he persuaded to vote for his squalid little gang of cutthroats. What would they have done, if they had know what would happen?