Today’s growth figures are the latest evidence the coalition’s rapid spending cuts have pushed the UK economy from the fastest growth for a decade towards zero.
Today’s GDP growth figures (pdf) are the latest evidence the coalition’s rapid spending cuts have pushed the UK economy from the one of the two equally fastest quarters of growth for a decade towards zero, writes Cormac Hollingsworth
A year ago, the fastest growth since 1999 cut the deficit by £10.8 billion, that’s on top of the £2bn of the VAT rise. It is possible that St Paul’s clearing out the tents is not some craven capitulation but an expectation that certain other political constituencies will start praying very hard for a Labour-like growth miracle.
After all, in Q2 and Q3 2010 the UK economy fourth quarter growth exceeded the 2.1% average since 1998. Since then the economy has been on a downward track to today’s value that over the past four quarters from Q3 2010 – Q3 2011, the economy has growth by only 0.5%.
The slow growth of the current year according to the city forecasts is expected to increase the deficit £13bn. (calculated from the current Treasury consensus forecast for public borrowing of £129.8bn).
The problem for the coalition is that low growth increases borrowing over the life of the parliament.
So while the OBR forecast in June 2010 that borrowing would be £89 billion in 2012-13, the consensus forecast is for that to be £113.6bn. The outlook is bleak; expect lots of Tories at prayer in St Paul’s very, very soon.
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• Unprecedented growth of 1.3 per cent needed for OBR to meet its projection – Will Straw, October 31st 2011
• With Plan B, we can have a good economy for a good society – Howard Reed, October 31st 2011
• The coalition is failing to tackle youth unemployment – Ruwan Subasinghe, October 26th 2011
• For every extra £4 spending is cut, it only cuts borrowing an extra 75p – Cormac Hollingsworth, October 18th, 2011
• Inflation report is bad news for Osborne’s targets– Tony Dolphin, October 18th, 2011