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

Recruitment Genius: Telesales & Customer Service Executive - Call Centre Jobs

£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...

Ashdown Group: Finance Manager - Covent Garden, central London - £45k - £55k

£45000 - £55000 per annum + 30 days holiday: Ashdown Group: Finance Manager - ...

Ashdown Group: Systems Administrator - Lancashire - £30,000

£28000 - £30000 per annum: Ashdown Group: 3rd Line Support Engineer / Network ...

Recruitment Genius: Graduate Web Developer

£26000 - £33000 per annum: Recruitment Genius: A Web Developer is required to ...

Day In a Page

Read Next
 

i Editor's Letter: A royal serving the nation

Oliver Duff Oliver Duff
David Cameron met with Ukrainian President Petro Poroshenko prior to the start of the European Council Summit in Brussels last month  

David Cameron talks big but is waving a small stick at the Russian bear

Kim Sengupta
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn