Latest GDP Drop Puts Pressure On Osborne
A lot of people suspected the news would not be good. It turns out it was even worse than expected.
Britain's economy is shrinking once again - and far deeper into negative territory than was anticipated.
That 0.3% decline in the fourth quarter of 2012 leaves Britain's gross domestic product 3.3% shy of its 2008 peak.
It's deeply embarrassing for the Chancellor, who told Sky News that despite this setback it was "a reminder that Britain faces a very difficult situation.
"We have problems at home but there are also problems abroad. You can either run away from them - and the British public understand there is no overnight solution and we are heading in the right direction."
But according to the Shadow Chancellor, Ed Balls, the figures are the "moment when David Cameron and George Osborne's complacency is completely exposed".
And it leaves the UK even further shy of its international counterparts. In Canada, the US, Germany, China and plenty of other major countries, GDP has already rebounded to the level it was before the crisis.
Britain, on the other hand, remains below that peak - even five years after the crisis started.
The National Institute for Economic and Social Research defines a depression as a "period when output is depressed below its previous peak."
By that definition, Britain is still stuck in a depression - and this depression is longer than any in recorded economic history: even the 1930s.
In the end, this is the challenge for George Osborne. Britain's total capacity to produce wealth - which is in essence what GDP measures - has diminished substantially during this crisis. That, when it comes down to it, is what lies behind the squeeze so many families are facing on their incomes.
And the economy's inability to regain meaningful growth is something that should concern the Chancellor. There is now growing pressure (even more than the significant amount there was before) for him to reconsider his fiscal plans.
It isn't merely Nick Clegg: the International Monetary Fund's chief economist, Olivier Blanchard, believes that having warned Mr Osborne multiple times that he needs to be ready to change course if the UK economy disappoints, that moment has now come.
Whether this pressure will be enough to force Mr Osborne to change course is another question. He has been so forthright about the need for austerity all the way through the crisis that it would surely be politically humiliating to do an about-turn now.
And indeed, the evidence is that the austerity practised in the UK hasn't actually been as aggressive as the Chancellor has made it sound.
However, the Chancellor refused to answer whether he agreed or disagreed with Mr Blanchard's advice.
Pointing to alternative support from the former IMF chief economist he said: "You're going to get economists disagreeing. I'm absolutely clear: we have the right plan. It was not a plan that was going to deliver results overnight."
what do you think?
We're in a triple drop recession and this lot have no answers - can't blame labour now they've done nothing to get country up and running just lined own pockets
Windows Live User
Shirley is correct Mr Chancellor, Do you have any idea how to kick start the economy at all? I can give you a clue. It begins with getting manufacturing started. Everything else will roll from there on in. Stop focusing on cuts with your buddies, and do a little investment in that area (all over the land I would add, not just in London region. You are getting paid pretty well and for a few years now, but nothing is happening, (or is that labour's fault?)
Shirley The socialist on here are still blaming Margaret Thatcher for our current situation, so there is plenty more mileage in blaming labour
Windows, your diagnosis is correct but as long as we have Lib/Lab/Con governments, don`t even think about it. They are committed to internationalism all the way.
Michael that's because its true .get a history book
Stephen I have many history books, but unlike you, mine do not stop at 1990
Maybe if this lot had a dose of austerity they may have second thoughts about this failing plan. They'll certainly get a dose of unemployment soon but in the meantime we're disappearing down the pan. Surely the mark of an intelligent man is to recognise that maybe you're wrong and try something different. All this government seem to be doing is promoting despair and destitution.
This lot could not run a bath,time to wake up to reality.We have nothing left to sell abroad as the foreigners can make what we make a lot cheaper.Nearer to home,Osborne has done all the cutting and carving we have nowt left to spend after paying mortgage/rent and a loaf of bread,hence the dissapearance of the big names off the high street.What is the point of buying a d.v.d. PLAYER from COMET if we can't afford a d.v.d H.M.V.
According to press today Cameron Osborne and boris were out on the town having a good time and thy Osborne flew back business class - they've not got a care in the world and have not got a clue how to make things right again Osborne totally clueless