Leading article: We need growth – and fast

For all the turmoil of recent years, the impact of the financial crisis is only just being felt

Share
Related Topics

For the Chancellor, at least, there have been some encouraging signs in recent weeks. After all, the IMF has boosted its forecasts for UK growth, and is now predicting that Britain will outperform both Germany and France this year. Unemployment is also coming down, for the first time since spring 2011, and an optimist might interpret March's mini-surge in retail sales as consumers getting into the swing of an improving outlook.

If only. In fact, there is still much to be concerned about. Retail experts explain last month's splurge as good-weather spending brought forward, and predict an accompanying slump on the high street this month. More worrying still, much of the improvement in the jobs market is down to the creation of part-time, rather than full-time, roles. And with inflation back on the rise and wages still falling in real terms, even those with jobs are more pessimistic than they were. One in four of us now expect our financial situation to worsen over the year ahead, a far higher proportion than six months ago.

People are right to be cautious. For all the turmoil of the past few years, the full implications of the financial crisis are only just beginning to be felt. Take yesterday's piece of half-way good news for George Osborne. There is no denying that annual borrowing in line with forecasts is a good thing. But Britain still faces another five years of belt-tightening; and the worst is yet to come, as the focus shifts from investment budgets to welfare and public services.

Neither is success guaranteed. The Chancellor may have met last year's borrowing target, but his longer-term goals are still far from secure, relying as they do on economic growth not far off 3 per cent in just two years' time. Given that GDP figures published this morning are expected to record growth flatlining at a measly 0.1 per cent in the first three months of this year, the challenge is prodigious.

In fairness, the Government is not wholly without ideas. Almost-hidden behind the details of the Budget, was a vision of Britain as a world-class service provider competing on a global stage that has much to recommend it. But with so many ordinary people facing immediate financial challenges, setting a strategic direction – while laudable – will not be enough. Indeed, as if to underline the point, the Prime Minister's export-boosting tour of Asia this month coincided with figures revealing that exports are actually falling, dragged down by anaemic demand from Europe and a wobble in growth markets such as China.

More than ever, therefore, the economy needs a credible, short-term growth plan. So far, the Chancellor has only tinkered. True, revisions to the planning system should help; as will ring-fenced infrastructure investment schemes. But such measures take time that Mr Osborne may not have. Until he can convince ordinary people there are effective levers he can pull, and that he is doing so, confidence will waver, consumer spending will suffer, and a vicious spiral of austerity and recession will threaten to undermine his efforts to repair the public finances.

It is not only the economic stakes that are high. There is also a very real price to be paid at the ballot box if, without a clear sense of where future growth will come from, public support for the Government's austerity programme wanes. In Europe the cracks are already beginning to show, not least in the tottering support for Nicolas Sarkozy in France. Mr Osborne need not necessarily borrow to stimulate the economy. But he must look more carefully at the growth implications of what is being spent. Most of all, he must do it quickly.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Account Executive/Sales Consultant – Permanent – Hertfordshire - £16-£20k

£16500 - £20000 Per Annum: Clearwater People Solutions Ltd: We are currently r...

KS2 PPA Teacher needed (Mat Cover)- Worthing!

£100 - £125 per day: Randstad Education Crawley: KS2 PPA Teacher currently nee...

IT Systems Manager

£40000 - £45000 per annum + pension, healthcare,25 days: Ashdown Group: An est...

IT Application Support Engineer - Immediate Start

£28000 per annum: Ashdown Group: IT Software Application Support Analyst - Imm...

Day In a Page

Read Next
Emma Watson has become the latest target of the 4Chan nude hacking scandal  

What is 4Chan? And why does it threaten women like Emma Watson?

Memphis Barker
Chuka Umunna was elected MP for Streatham in 2010  

Could flirty Chuka Umunna be worth a punt for Labour’s top job?

Matthew Norman
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits