The deficit is now set to be8.4 per cent oin 2012/3, missing Osborne's original projection by a full 50 per cent, and one quarter above the original Darling projection
The National Institute of Economic and Social Research’s latest growth predictions are certainly grim: the think tank projects that the economy will shrink by 0.1 per cent in 2012. That means, fewer jobs, smaller wages, and a harder economic time for most UK citizens.
But, as we know from the correlation between growth and the deficit using the Office for Budget Responsibility’s (OBR) own figures, such a contraction will increase the deficit.
Using George’s Marvellous Deficit Calculator, an economic contraction of 0.1 per cent relates to a deficit of 8.4 per cent in 2012/3 – missing Osborne’s initial projection of 5.5 per cent – half as much again.
It is around one quarter larger than 6.6 per cent deficit projected under the Darling plan by the OBR.
And as Will Straw and Guido Fawkes have pointed out this, he can’t blame the poor performance on the Eurozone crisis as the trade deficit with the continent continues to shrink.
“Contractionary Fiscal Expansion” isn’t working. What we have, some people might say unsuprisingly, is “contractionary fiscal contraction”. The game is up, and it is time for the government to put the economy before its pride and admitted it is so.
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• Positive trade figures undermine Osborne’s claim that Eurozone is to blame for negative growth – Will Straw, February 9th 2012
• Economic Update – February 2012: Double dipped – Tony Dolphin, February 7th 2012
• US grew almost twice as fast as UK in 2011 – Will Straw, January 27th 2012
• The double-dip begins – Tony Dolphin, January 25th 2012
• Hopes of an export and manufacturing-led recovery recede – Tony Dolphin, August 9th 2011