George Osborne has again blamed the double dip recession on the eurozone - the truth, however, is the causes of the recession are primarily domestic.
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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.
In 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).
• 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.”
30 Responses to “Osborne wrong again in passing buck to eurozone”
Anonymous
Any site which quotes Ed Balls as evidence to back themselves up is worrying
E'Liza Gedrych
Frm earlier: Osborne wrong again in passing buck to eurozone, writes @wdjstraw: http://t.co/LYXjyZho #EuroCrisis #OsborneFail
Frankie Hine-Hughes
If anyone believed Osborne's line on the Euro – they should read this http://t.co/fAstnbfe . Whats more its rank hypocrsy from the tories.
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.
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.