The latest poor GDP numbers mean Britain's economy has shrunk since general election.
Today’s GDP figures mean Britain’s economy has shrunk since the general election and will need to grow by 1.3 per cent in the second half of the year to avoid being in recession for the totality of 2012.
To meet the OBR’s latest projection that GDP would grow by 0.8 per cent in 2012, growth in the remainder of the year would need to be an astonishing 3.0 per cent.
Even the IMF’s projections last week of just 0.2 per cent growth for the UK now looks ambitious. Growth of in the remainder of the year would need to be 1.8 per cent to achieve that slender target.
In March, the OBR published their latest Economic and Fiscal Outlook (pdf). This included quarterly estimates for GDP growth in 2012 as shown in Table 3.3 below.
Since the estimates were published:
• Q4 data for 2011 was revised down to -0.4 per cent;
• Q1 data for 2012 was released showing that GDP was -0.3 per cent;
• And today, the latest data shows that the economy contracted again in Q2 by -0.7 per cent.
The latest data shows the economy is smaller today than it was in in the first quarter of 2010 and now 4.5 per cent below the previous peak in the first quarter of 2008.
• Labour market update: No good news for young people 18 Jul 2012
• Osborne wrong again in passing buck to eurozone 10 Jun 2012
In the two years since the general election, the economy has fallen by 0.3 per cent. This contrasts starkly with the OBR’s first projections, before the emergency budget in June 2010, which showed projected growth of 2.6 per cent in 2011 and 2.8 per cent in 2012.