Growth in 2011 set to be less than half OBR’s original prediction

This morning's growth figures show that the economy grew by just 0.2% in the Q2. Given that the economy flat-lined since September, it means growth has been anaemic for the last nine months.

UK GDP, Q1 2006 - Q2 2011; click to enlarge

This morning’s growth figures show that – as expected – the economy grew by just 0.2 per cent in the second quarter of 2011. Given that the economy flat-lined in the six months after September, it means that growth has been anaemic for the last nine months as the chart below shows.

The OBR’s latest prediction for 2011 growth of 1.7 per cent now looks virtually impossible to achieve. Even if the economy gets back on track in Q3 and Q4, 2011 growth will barely hit 1.2 per cent – under half its original prediction of 2.6 per cent which it made in June 2010. The OBR has already been forced to downgrade its growth predictions on three previous occasions and will have to do so for a fourth time when it releases its forecast evaluation report in the autumn. Alongside this, they will be forced to raise their borrowing predictions.


Today’s figures drive a coach and horses through George Osborne’s strategy. He has said on many occasions, including in an FT article (£) last March co-authored with Jeffrey Sachs, that fiscal retrenchment would stimulate the economy through increased consumer and business spending as a result of higher confidence and reduced borrowing costs.

Instead, cuts that are too fast and too deep are exacerbating the unfavourable economic headwinds caused by what the ONS has termed “special events” such as the additional bank holiday, the Royal Wedding, and warm weather in April.

The sluggish growth was not unexpected. As I wrote on Comment is Free yesterday:

“In the last month alone consumer confidence dipped, lending to businesses fell, manufacturing hit a two-year low, the service sector contracted, retail sales struggled to rebound after a big drop last month and the trade deficit widened.”

George Osborne is being urged by Number 10 to kick-start the economy. The question when will they accept the inevitable and concede that a Plan B is the only way to do this.

37 Responses to “Growth in 2011 set to be less than half OBR’s original prediction”

  1. John West

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  2. False Economy

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://t.co/VsPKJsT #falseeconomy

  3. Shamik Das

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  4. Max

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  5. Shamik Das

    @clairee_french Here's Will's analysis: http://www.leftfootforward.org/2011/07/george-osborne-growth-q2/ Hope the blogging goes well!

  6. Brian Moylan

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  7. Surreal Politics

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  8. Brummie Protestor

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  9. Alex Glennie

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  10. Bill Cawley

    Terrible and I imagine in an area like North Staffs in reality its a minus figure http://fb.me/uZ3nl9Ep

  11. Bill Cawley

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  12. Tom Rouse

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction http://t.co/kyaXgJj

  13. Michael

    Growth in 2011 set to be less than half OBR’s original prediction l Will Straw l Left Foot Forward – http://j.mp/oun10C

  14. MustBeRead

    From @WDJStraw on @LeftFootFwd: Growth in 2011 set to be less than half OBR’s original prediction http://t.co/GgfRYBd

  15. Kevin McKeever

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  16. Guy Shrubsole

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction http://t.co/ZjfOGZ5

  17. Len Arthur

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  18. damon brown

    Would be interesting to see the geographical breakdown and or business area breakdown for this and see where the losses and gains really are. Or who is losing and who is profiting form this scorched earth policy… hmmm I wonder?

  19. anyleftiwonder

    Hats off to the well educated twerps who manage to find all these excuses. Still – millionaires row will not be affected – bankers – private healthcare – the Tory cabinet etc. Have to hope the next general election comes sooner than expected before our country goes to the dogs.

  20. alexsmith1982

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction http://t.co/5hjggG9

  21. Low growth implications for living standards particularly bleak | Left Foot Forward

    […] morning’s weak Q2 stats (pdf) would be worrying in any recovery. But in the aftermath of such a deep fall in […]

  22. Pabs

    Growth in 2011 set to be less than half OBR’s original prediction l Will Straw l Left Foot Forward – http://j.mp/oun10C

  23. Kaisie Rayner

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction http://t.co/5hjggG9

  24. Alan W

    So in December it was the snow and in April it was the sunshine. Perhaps Osborne could enlighten us as to precisely what kind of weather the economy needs in order for his “expansionary fiscal contraction” to start working.

  25. UK GDP figures released – live coverage | moregoodstuff.info

    […] estimates that the UK will only post growth of around 1.2% in 2011, even if the economy gets back on track in the second half of this year. In modern terms, 1.2% […]

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  28. NoBigGovDuh

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  29. IoD: Wales feels like it’s back in recession | Left Foot Forward

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  31. Leon Wolfson

    It is getting to be “wrong kind of leaves on the line” isn’t it.

    Oh well, on the bright side the workings of the Office of Budgetary Fiddling, and their refusal to properly extrapolate growth trends (hence the constant revision) based on government policy…

  32. Tory Right’s “deregulation zealots” threatening UK’s green growth | Left Foot Forward

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  36. Liam McClure

    I have been working with Oxfam Scotland on a project called the Humankind Index which looks beyond GDP as the main measure of growth and looks to what people really think is important for them to live a happy, sustainable life. I thought you might be interested in having a look. Here is the link – http://www.oxfam.org.uk/humankindindex

  37. New IMF boss joins calls for Plan B | Left Foot Forward

    […] in the second quarter of the year. Last week French growth ground to a halt while British growth hit just 0.2 per cent over the same period – forcing the Bank of England to downgrade its growth forecast for […]

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