Given the waves of dire economic news that have been breaking over us in recent months, the latest bulletin from the Office for National Statistics hardly comes a surprise. But there is nevertheless something sobering about the confirmation from the ONS that economic growth in Britain has now ground to a halt.
For the first time since 1992, our economy has ceased to expand. Some might argue that this is not such a disaster; that after such a prolonged period of expansion we can afford to slow down. But the flaw in this sanguine analysis is that we do not seem to be in for a soft landing. The speed at which growth has fallen away indicates that this journey is likely to end in recession. The economic implications are going to be significant. Businesses will go bankrupt. Many will lose their jobs. We will all feel poorer.
But just as significant will be the political implications. When he was chancellor, Gordon Brown made a great show at Budget time of pointing out that the economy had grown in every quarter in which he had been in the job. Having eagerly taken credit in the good times, Mr Brown cannot escape some of the blame now that conditions have turned nasty. Indeed, the worse things get, the more questionable his stewardship of the economy over the past decade begins to look.
The blame for the global credit crunch and the recent increases in commodity prices cannot reasonably be laid at the door of the Government. But the strategic economic decisions taken by ministers in recent years are beginning to look rather dubious now, in particular the encouragement of our national reliance on the earnings of the financial services and housing sectors. Not so long ago, Mr Brown and his successor as Chancellor, Alistair Darling, were arguing that Britain would weather the storms of the global financial crisis better than other countries. In fact, it turns out that our economy is actually more vulnerable than the economies of many of our neighbours thanks to our heavy national indebtedness.
What can the Government do now? We are told that Mr Brown is preparing a rescue package to help those struggling in the downturn. But what will Mr Brown and Mr Darling use to pay for this? The Treasury's tax receipts are falling as corporate earnings drop off. And the public finances were already overstretched a year ago. Mr Brown's failure to build up a fiscal surplus during the boom now leaves him with no room for manoeuvre. The only way he could create a serious rescue package is by scrapping his fiscal "golden rules", as the Treasury appears to be considering.
No doubt many Labour MPs in serious danger of losing their seats at the next election would be willing to see the Government make such a sacrifice. But that does not make it a responsible course of action. These rules were supposed to be a signal of the Government's intent that it would not spend more than it collects in taxes over the course of the economic cycle. Ignoring them now risks stoking domestic inflation and eroding the confidence of foreign investors.
Yet it is not merely the Government that will feel the effects of the evaporation of growth. The Conservative leadership's economic policy until now has been a vague promise to "share the proceeds of growth" between public services and taxpayers. But without growth, such a policy is meaningless. The real question that needs to be asked of the Conservatives is what they will do to restore health to our economy. For the first time in 16 years, the political battle for growth is back on.