Gross Domestic Product shrank 0.3 per cent in the final quarter of 2012 - with the economy flatlining through the whole of 2012.
The UK economy has now shrunk in four of the last five quarters – and since the government’s spending review in the fourth quarter of 2010, the UK economy has grown by just 0.4 per cent; between then and Q3 2012 (the latest figures available), by comparison, the USA has grown by 4.2 per cent, Germany by 3.6 per cent and France by 1.5 per cent.
See Chart 1:
The UK economy is now 3.3 per cent below its pre-crisis peak, while the USA is 2.5 per cent above and Germany is 2 per cent above.
Responding to the figures, shadow chancellor Ed Balls said:
“Today is the moment when David Cameron and George Osborne’s complacency is completely exposed. These deeply disappointing figures expose just how dangerously complacent the prime minister was when he said last autumn that the ‘good news will keep coming’…
“David Cameron and George Osborne have been asleep at the wheel. They’ve spent the last six months obsessing about a referendum in five years time, not focusing on the problems in our economy today. And their decision in 2010 to raise taxes and cut spending further and faster choked off the recovery, as even Nick Clegg is now beginning to admit.
“It is grossly irresponsible and out of touch of George Osborne to once again try to shrug off bad news and refuse to heed the advice now coming to him from right, left and centre.
“The chancellor should listen and act now to give direct help to struggling families and businesses. Instead, the only people he is helping are millionaires who will get a tax cut in April, on the same day that millions of working families have their tax credits cut. This kind of Tory trickle-down economics is just not going to work.
“As the IMF has warned again this week, we need a change of course in the Budget with policies to kick-start our flatling economy.
“A plan B now should include a compulsory jobs guarantee for the long-term unemployed and a temporary VAT cut to boost family incomes and our struggling high streets. We should also bring forward infrastructure investment including building thousands of affordable homes and establish a British Investment Bank to boost lending to small businesses.”
We will have more analysis of today’s figures later today on Left Foot Forward.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.