Hell-for-leather austerity comes at a price – and we’re paying it

Outlook

George Osborne during a visit to AW Hainsworth and Sons textile manufacturer in October (Getty Images)

Ouch! Britain’s economy has slowed even more than the experts expected in the past three months.

Tuesday’s GDP figures prompted another predictable round of doom-mongering among the pundits, but it’s more likely this is a relatively small bump in the road. Much of the fall was due to the notoriously volatile construction industry, where numbers could well end up getting revised upwards anyway. Longer term, Britain is recovering slowly but surely from the depression of the financial crisis – and this despite the slowing Chinese economy. Even one of the main problems faced by our exporters – the strength of the pound – is itself proof of our relative resilience.

Our glasses shouldn’t be entirely rose-tinted, though; it is concerning that our manufacturers are struggling again. The great pity of this is that, as the former US Federal Reserve chief Ben Bernanke argued this week, some of the current pain could have been averted had we not gone hell for leather down the austerity route. A few more big public infrastructure projects would have given our factories and engineers a handy cushion against the Chinese slowdown and left central bankers with less work to do.