George Osborne’s pyrrhic victory

The most remarkable thing about this morning's coverage of the quarterely GDP figures is how lightly George Osborne is getting off.

The most remarkable thing about this morning’s coverage of the quarterly GDP figures is how lightly George Osborne is getting off.

The economy is growing at 0.8 per cent and has now grown for three successive quarters, which should be welcomed, but how does this represent a victory when it has taken three years to achieve?

When George Osborne announced his emergency budget in October 2010, the economy had been growing for five successive quarters. At the time the OBR predicted that by this point we would have achieved growth of 7.7 per cent. In reality, however, the British economy has grown by a modest 2.6 per cent, as the graph from Duncan Weldon of the TUC demonstrates.

GDP tuc

The fact that 0.8 per cent growth is cause for celebration is testament to just how low expectations have become with Osborne in the Treasury.

Triumphalism at today’s figures also relies on the illusion that the slate of the past three years can be wiped clean. It can’t. This has been three years of falling living standards and increasing hardships which will leave a lasting (and expensive) legacy. Prices have risen in 39 out of 40 months since David Cameron came to office; and while the UK remains 2.5 per cent below its pre-crisis peak, the US economy – which adopted a more Keynesian-style approach post-crisis – is now 4.6 per cent above its pre-crisis peak.

Labour graph

There are also more well-documented hardships: rough sleeping in London has increased by 13 per cent in the past year; 50,000 council tenants are facing eviction because of the Bedroom Tax; and 350,000 people have had to use a food bank in the past six months alone because they can no longer afford to feed themselves.

It won’t feel like the economy is ‘back on track’ for these people, nor for those scraping ice from the inside of their windows this winter because of rising energy bills – Britain now has the second highest level of fuel poverty in Europe.

The fact that borrowing is coming down also makes the case that many on the left have been putting forward for years: that the best way to pay down the national debt is by creating the conditions for growth, something which Osborne has singularly failed to do for so long.

If today represents a victory for George Osborne, it is a pyrrhic one.

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