Osborne wrong again in passing buck to eurozone


E-mail-sign-up Donate

 

.

George Osborne makes a familiar argument today, seeking to blame the double dip recession on the eurozone. The truth is the causes of the recession are primarily domestic.

George-OsborneIn the Sunday Telegraph, the chancellor writes:

“Our recovery – already facing powerful headwinds from high oil prices and the debt burden left behind by the boom years – is being killed off by the crisis on our doorstep.”

While Britain’s economy contracted by 0.3 per cent in the first quarter of 2012, Germany grew by 0.5 per cent while both France and the Eurozone avoided recession with a flat economy.

Although trade was a very modest net drain on GDP in the first quarter, this was due to a rise in imports rather than a fall in exports.

The ONS’s most recent trade release found:

“The deficit in trade in goods with EU countries widened by £0.7 billion to £4.5 billion in March, compared with the deficit of £3.7 billion in February, as exports were virtually unchanged at £13.2 billion (up by 0.1 per cent), and imports rose by £0.8 billion (4.4 per cent) to £17.6 billion.”

A much larger contribution to Britain’s double dip recession was a 4.2 per cent quarter-on-quarter drop in gross capital formation, or investment (see Annex B).

 


See also:

Eurobonds are about solidarity, which is not Cameron’s strong point 8 Jun 2012

Austerity Isn’t Working • Sparpolitik ist keine Lösung • L’austérité ne marche pas 28 May 2012

Europe’s right still full-steam ahead on mad dash for austerity 16 May 2012

Will President Hollande be able to turn France – and the Euro Area – around? 8 May 2012

Osborne’s ideology-driven economics have failed: We’re all paying the price 25 Apr 2012


 

Readers should remember that this is not the first time that Osborne has wrongly tried this trick.

No wonder the shadow chancellor, Ed Balls, says today:

“It’s deeply complacent and out of touch for George Osborne to blame Europe for a double-dip recession made in Downing Street. He will fool nobody with these increasingly desperate excuses.”

 


Sign-up to our weekly email • Donate to Left Foot Forward

This entry was posted in Sustainable Economy and tagged , , , . Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.
  • Anonymous

    Any site which quotes Ed Balls as evidence to back themselves up is worrying

  • Pingback: E'Liza Gedrych

  • Pingback: Frankie Hine-Hughes

  • Anonymous

    Why, because it might contradict your dogma? You come on here to troll, because?

    For all that I think the man’s an ineffectual centralist, he’s the leader of the opposition and it’s fine to quote him.

  • http://twitter.com/Shinsei1967 Nick Reid

    The clear reason for the UK’s lack of growth over the last 18 months has been inflation reducing people’s household income.

    A high oil price (it was $70 when Osborne became Chancellor and almost doubled from there) and weak sterling has pushed up the price of petrol, utilities, food and other products imported or dependent upon transport costs.

    The OBR and IMF has been absolutely clear on this.

    The most recent analysis from the IMF didn’t even mention cuts or austerity as contributing to the UK’s lacklustre growth.

    Fortunately the oil price is now falling and sterling strengthening so real household incomes, despite slow wage growth, should improve

    However, what is also clear is that the Eurozone will be a brake on economic growth in the future. Which was Osborne’s point I think.

  • Anonymous

    I’m not a “troll” and find such a comment repugnant.

    From what I’ve seen of Ed Balls he’s, as you said, ineffective but he also seems to follow the same guide lines which the previous Labour government followed (which put us in this financial mess in the first place).

    The fact that Ed Balls comments are taken with such credit, which is understandable as he is the opposition, is worrying to myself and to possibly others.

    I’ll edit my previous comment to reflect these changes as I meant no discredit to this website.

  • http://twitter.com/tristanpw1 TristanPriceWilliams

    He’s not actually the leader of the opposition, there is an even more ineffectual blikey for that in the person of Ed Miliband.

  • Anonymous

    Ah yes, true and my bad, you can tell how much attention I pay to Labour these days. They’re simply not really relevant to the left.

  • Pingback: Noxi

  • Pingback: Tom Bloomfield

  • Blarg1987

    I think part of the reason why his comments are being taken as so credible is that they are based on previous recessions i.e. spending to get the economy moving.

    Granted he is not an economist but its like with anything if the work idiot is staeing the obvious to management and as long as it is a sound reasoning to it, people will see it as credible and follow it.

    The trouble for Labour is that they have very few credible MP’s and those that are credible are not in the right position.

  • Mr. Sensible

    The sooner people realise austerity doesn’t work, the better for everyone.

  • Pingback: Kevin Richards

  • Pingback: Jenni Viitanen

  • Pingback: Hitchin England

  • Pingback: BevR

  • Pingback: Magapanthus Smith

  • Pingback: Magapanthus Smith

  • Lord Blagger

    Primary cause – government debt. The 1 trillion borrowing and 6 trillion hidden off the books.

  • Pingback: Shifting Grounds

  • Lord Blagger

    Explain why a recession caused by too much borrow and spend will be fixed by more of the same?

    Keynes tells us that a borrow and spend cures a recession. However prior to the recession there was lots of borrow and spend going on. If Keynes is right there should have been no recession at all.

    Or Keynes is wrong and just a witch doctor proscribing economic voodoo.

  • Pingback: cameronsfollys

  • Pingback: David Taylor

  • Blarg1987

    There is more to it then that, if you actually break down the detail Keynes belives that you borrow to fund large infastructure projects to create demand to encourage growth then reduce capital state spending during the good times to pay it back but, you ensure it is all well maintained.
    PFI etc is not goosd spending and should not have happened but Keynes has been shown to work if you look at economic history and the details.

  • Anonymous

    Explain how repeatedly shrinking the economy will help.

    Your policy of hurting the poor until the magic money tree grows or they die (either/or) is being carried out, QUIT WHINING.

  • Anonymous

    Primary cause of debt – Your kind pushing out wages for capital, and hiding your money from being taxed properly.

  • Anonymous

    No, he is and has been blaming the Eurozone for the results of HIS policies.

    Our consumer confidence is -29. Even the Eurozone is only at -20! The office of budgetary fiddling is a partisan joke, and multiple international organizations, hardly hotbeds of left-wing thought, have been telling him to pull up from the death spiral.

    You’re trying to blame the problem, as usual, on anything but the real causes – the Government’s deliberate campaign against growth. For political partisan reasons. When even Belgium, in the period without a government, substantially outperformed the UK despite being a Eurozone member…

  • Pingback: BevR

  • Ed’s Talking Balls

    Pretty sure Keynes also advocated running a budget surplus during a boom.

  • Pingback: mick hills

  • YouGov Tracker

  • Touchstone Economic Tracker

  • Best of the web

  • Archive

7ads6x98y