Despite the low expectations, when the second-quarter GDP figures finally came they were worse even than the gloomiest forecasts. George Osborne – interviewed, as usual, against the confidence-inspiring backdrop of a building site – tried to sound upbeat, albeit disappointedly so. But evidence of a deepening slump, indeed of the worst double-dip recession for 50 years, is a serious blow to the standing of an increasingly embattled Chancellor. For all that, he must hold his nerve.
There is certainly no question that the economy is in a bad state. Less clear – for all yesterday's statistics – is exactly how bad. It is not simply that first estimates of GDP figures are notoriously unreliable, subject to significant revisions over anything up to three or four years. Nor just that the extra Jubilee bank holiday and unusual deluge of rain will have taken their toll, not least on the services and construction sectors that performed so poorly. Of more substance still is that so many other economic indicators do not paint the same picture of sharp and unremitting downturn.
Take the Government's June borrowing figures. The headline figure might have been tricky, with the overall total higher than both last year's level and also analysts' estimates. But tax revenues were significantly up, hardly the sign of an economy heading resolutely south at a rate of 0.7 per cent over a single quarter. Similarly, dipping unemployment, resilient car sales, and a slew of business surveys reporting muted but steady activity all point to, if not growth, then at least not an economy falling off a cliff.
If such statistical confusion offers a glimmer of hope, there is nonetheless still plenty to be concerned about. Most discouraging of all is that, when it comes to the most serious pressures on the economy, there is no way to avoid them. After the bursting of the biggest credit bubble in history, the Government and British citizens alike need to pay down their debts – and it is not possible to do so without a depressive effect on growth. Meanwhile, both consumer and business confidence are – entirely rationally – depressed by the limitless uncertainty in the eurozone. In such circumstances, there is no easy route to growth.
That is not to say the Government can do nothing at all. Efforts to boost the economy have, finally, stepped up a gear, with more quantitative easing, another Bank of England scheme to unlock business lending, and Treasury plans to use the state's balance sheet to unlock private sector infrastructure investment.
All well and good. But Mr Osborne took too long to take decisive action and cannot now rest on his laurels. The latest schemes must be monitored and promoted with assiduity, if they are to have any notable effect. And work on further moves to expand financing, to unlock business investment, and to boost infrastructure building must continue apace.
Where yesterday's GDP figures have the greatest implications is not in the economic sphere, however, but in the political one. The Opposition, scenting blood, was quick to claim them as further evidence that the Government's strategy is failing, piling pressure on the Chancellor with renewed calls for less austerity and more spending. While politically attractive, such demands are precipitous.
The euro crisis may yet make a change of course inevitable, as the IMF noted last week. But it is not yet time for a wholesale rethink. Rightly or wrongly, the Government's credibility, and with it Britain's economic stability, rests on its deficit reduction plan. With so many economic indicators pointing different ways, the Chancellor – and the rest of us – must stick with Plan A for a while longer.