That was a big surprise. Not! Yesterday's figures came as absolutely no surprise to many of us who have warned for months that a double-dip recession was coming. I warned on 24 June 2010 that George Osborne's austerity budget "kills recovery at birth". I argued that "I am now convinced that as a result of this reckless Budget the UK will suffer a double-dip recession". It isn't as if our part-time Chancellor Osborne wasn't told. But he ignored the warnings by Robert Skidelsky, Paul Krugman, Martin Wolf, Ed Balls and others and even accused us of being "deficit deniers". Keynes turned out to be right. The shadow Chancellor has been vindicated.
Take care of growth and the deficit will take care of itself; sadly, reducing the deficit doesn't fix growth. Firms can save money by firing all their sales staff but then they shouldn't be surprised when sales fall. It seems that the Coalition consisted of "growth deniers" and assumed that slashing public spending would lead to a resurgence in the private sector. There was never any empirical support for such a proposition.
Blaming Europe doesn't wash as the main driver down has been the construction sector. It is time to cut National Insurance to zero on the young and give big incentives for firms to invest and hire, plus begin an enormous programme of infrastructure spending.
The Coalition still has no plan for growth. At the very least, it is time for a new Chancellor who has some clue about economics.
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