David Blanchflower: The facts aren't going the Coalition's way, so it has resorted to spin

Economic Outlook: Misleadingly, Danny Alexander suggests the government has created 634,000 jobs

As I had long predicted, the UK has fallen into a double-dip recession. The preliminary estimate for GDP growth for the first quarter of 2012 came in negative, at an appalling -0.2 per cent. Given that there was negative growth in the fourth quarter of 2011 of -0.3 per cent, this means that the UK had fulfilled the technical definition of a double-dip recession which occurs when there are two successive quarters of negative growth.

Click here to see the 'World economics: UK lags behind' graphic

And this is not just a technical recession given that three of the last four quarters and four of the last six have actually been negative. In contrast, over the preceding five quarters the economy grew 3.1 per cent under Alistair Darling and Gordon Brown. Disastrously, Slasher Osborne reversed policies that were working and replaced them with the new ones of slash and burn that were always doomed to failure, and fail they have.

The table presents GDP cumulative growth across forty countries in the five quarters between Q4 2010 and Q4 2011. The UK over this period under Osborne had no growth at all, ranking it 35th out of 41. Strikingly, under Osborne the UK grew less than Spain. The UK is the first country to produce an estimate for 2012 and the -0.2 per cent will inevitably lower our rankings further. So much for being "out of the danger zone".

It is not as if the out-of-touch posh boys weren't warned at the outset that they were taking an unnecessary and reckless gamble with ordinary people's lives. On 24 June 2010 just after Osborne announced his big austerity budget I wrote that "I am now convinced that as a result of this reckless Budget the UK will suffer a double-dip recession". Slasher sneered and snipped that he knew best, but sadly for the rest of us he did not.

Fiscal retrenchment through deep public spending cuts to reduce the deficit has not boosted private sector investment; quite the opposite. Ed Balls of course is vindicated in a big way. Recall his Bloomberg speech in August 2010 when he said "the danger of too rapid deficit reduction is that it proves counter-productive: tipping us back into recession, unemployment rising and the deficit and debt getting worse into the medium term".

This has now happened. My biggest concern right now is that there is little sign of growth anywhere; more of the same won't cut it. The majority of the cuts are still to be implemented, firms show little sign of hiring or investing and the strengthening of the pound hasn't helped. Falling real wages, rising job insecurity and weakening finances have helped to scare the consumer away.

As the Bank of England's Trends in Lending Survey made clear last week, net lending to UK businesses continues to fall, so it really is hard to see where any growth comes from given that the majority of cuts are yet to be implemented.

The Prime Minister cannot be allowed to continue to claim, as he did at PMQs last week, that it was Labour's fault for "getting us into this mess" as the economy was growing when his lot took over. In any case he backed all Labour's spending up to 2008 and wanted more not less deregulation. Cameron's assertion that borrowing more isn't the answer is disingenuous in the extreme given that is what the coalition is having due to the lack of growth; borrowing is up. Incompetence seems to reign supreme at both ends of Downing Street.

Once again there were claims that the numbers couldn't possibly be right and will all be revised upwards as the business surveys, especially the PMIs, have been strong. Well not all the surveys are bullish, especially the most recent from the Bank of England's agents. Plus the PMIs exclude retail and energy sectors, which have been weak.

The likelihood these numbers will be substantially revised upwards is actually slim given that the average revision over the last 20 years has been +0.1 per cent and -0.1 per cent since the start of the recession. It is more plausible that revisions will be down as they were in 2008 as the economy entered recession the first time.

The revisions by quarters in 2008 were as follows with the preliminary estimate first followed by the latest: Q1=0.4 per cent to 0 per cent; Q2=0.2per cent to -1.3 per cent; Q3= -0.5 per cent to -2.0 per cent; Q4= -1.5 per cent to -2.3 per cent.

Another approach is to play fast and loose with the truth. In a speech at the Institute for Fiscal Studies on 23 April the Chief Secretary to the Treasury Danny Alexander argued that "fiscal discipline is the vital precondition of growth....It is that credibility that is the essential precondition for private sector investment, growth and job creation – 226,000 new private sector jobs in the last year, 634,000 since we came into Government." Sadly this hapless coalition's fiscal discipline has turned out to be a "vital condition" for destroying growth.

Misleadingly, Alexander suggests that the coalition has created 634,000 private sector jobs. But it has not, as a significant chunk of these jobs were actually created before the coalition took office. Data on the number of private sector jobs are reported quarterly by the ONS for March, June, September and December. Between March 2010 and December 2011, the latest data currently available, 634,000 jobs were created, but if we start in June 2010, that number halves to 320,000. Alexander is trying to take credit for jobs that were created under Labour.

It is true that 226,000 private sector jobs were created over the last year but 270,000 public sector jobs were destroyed, so the number of jobs fell. Unsurprisingly, Alexander, the ex-Head of Communications for the Cairngorms National Park Authority, failed to mention that since May 2010 unemployment is up 185,000. If the facts aren't going your way, spin. Plan A has failed. It's time for a new team at the Treasury.

David Blanchflower is professor of economics at Dartmouth College, New Hampshire, and a former member of the Bank of England's Monetary Policy Committee

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