David Blanchflower: Hold off on the bunting – 0.6 per cent growth does not a recovery make
Osborne is surely putting more pressure on Mark Carney to do more QE and soon
The economy grew by 0.6 per cent in the first quarter and some people want to retain the bunting that was put up to celebrate the other and more famous (Royal) George. But actually I wouldn’t, as it would be rather premature.
I see little prospect that this growth rate will be sustained into the future, despite what George Osborne says. There is scant evidence that any of the four components of growth – investment, consumption, trade or government are at blast-off stage. And net business lending continues to fall.
We need to remind ourselves that the economy has only grown 1.8 per cent in total over the past 11 quarters and, of that, 0.7 per cent is down to Labour’s investment in the Olympics. In contrast, over the same period, both Canada and the United States grew by 5 per cent. Most forecasters are not expecting much, if any, growth in the second half of the year.
The economy that Osborne inherited when he took office was also growing at 0.6 per cent per quarter, and that continued for a couple more quarters until his reckless austerity policy and talking down of the economy took effect. Plus he still has no growth plan. Moreover, the last time there was growth of 0.6 per cent was in the third quarter of 2011 which was followed by -0.1 per cent, zero and -0.5 per cent the following three quarters.
The level of GDP, according to the Office for National Statistics, is still 3.3 per cent below its starting level at the beginning of 2008, which means that just over half of the lost output has been restored. The Great Depression saw output fully restored in four years.
Even contemplating raising rates, as the former Monetary Policy Committee member Andrew Sentance has ludicrously suggested, especially given the additional fiscal tightening that is in train, would kill what little growth there is, stone dead.
The Chancellor, George Osborne, is surely putting pressure on his disciple Mark Carney to do lots more quantitative easing and soon. Who said recovery?
David Blanchflower is professor of economics at Dartmouth College and a former member of the Monetary Policy Committee
Malaysia Airlines plane crash exposes alarming flaw in airline security: over one billion flights made last year without stolen-passport check
International Women's Day 2014: The shocking statistics that show why it is still so important
Teacher shows sex tape featuring herself to pupils during class by mistake
Swarm of killer bees sting woman 1,000 times
Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
Exclusive: Impact of immigrants on British workers ‘negligible’
Vince Cable: Teachers 'know absolutely nothing' about the world of work
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Australian man Rod Sommerville reacts to bite from deadly snake by reaching for cold beer
- 3 Teacher shows sex tape featuring herself to pupils during class by mistake
- 4 Singapore sting: Sky-high prices are pushing locals to the edge of affordability
- 5 Exclusive: UK banks in row over Yulia Tymoshenko 'millions'
iJobs Money & Business
£42000 - £45000 per annum + Benefits: Pro-Recruitment Group: Big 4 - Specialis...
£500 - £600 per day: Harrington Starr: Agile Scrum Master Certified Scrum Mast...
£45000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: A leading prov...
£50000 - £60000 per annum + Bonus and Benefits: Harrington Starr: Harrington S...