Concerning growth figures show Britain’s economic recovery has now ground to a halt

It is clearly a matter of great concern that Britain’s economic recovery has now ground to a halt. As the independent Office of National Statistics has confirmed, even after the effects of December’s bad weather, the UK economy saw no economic growth in the final quarter of 2010.

With families and businesses already facing both rising unemployment and rising inflation, the fact that the economy is now shrinking means the Conservative-led Government’s claims to have saved the economy and secured the recovery will ring very hollow indeed.

With consumer confidence low and public spending starting to be cut at the end of last year, it is no surprise that construction and services are the sectors hit hardest in these figures. But they are all the more worrying because they cover the period before the Government’s VAT rise and sharp public spending cuts have even begun.

It is now becoming even clearer that when David Cameron and George Osborne complacently congratulated themselves in the autumn for securing economic recovery, this was in fact the result of decisions taken by the Labour government to get the economy moving again.

The Government inherited an economy that was strengthening, with growth of 1.1% in the second quarter – thanks to decisions we took to support jobs and get the economy moving. It also meant last year’s deficit came in £20 billion lower than previously forecast.

Now we are seeing the first signs of what the Conservative-led government’s decisions are having on the economy. The fact is cuts which go too far and too fast will damage our economy. And shrinking growth and rising unemployment is not only bad news for families but will actually make it more difficult to get the deficit down.

As the head of the CBI said only yesterday, this Government has no plan for growth and it is taking political decisions regardless of the damage they will cause to job creation and business. Simply slamming on the brakes is not a credible economic policy.

It is not too late – George Osborne and the Treasury must urgently re-think their reckless plan to cut the deficit too far and too fast and start putting growth and jobs first.

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Posted January 25th, 2011 by Ed

2 Responses to “Concerning growth figures show Britain’s economic recovery has now ground to a halt”

  1. Charles Jurcich says:

    Ed,
    I think that next quarter (or this one) might look better, but the 2nd qtr 2011 will be abysmal.

    When Labour come to power again, they should consider making a list of all the Tory cuts and tax increases and simply reverse them. By then the economy will have contracted to such an extent that a simple reversal of their policies will create growth. Labour must not allow any supply-side initiatives implemented by the Tories to remain, as they actually make economies more vulnerable and more pro-cyclical.

    Further though, fiscal stimulus should not just be aimed at infrastructure construction, but also much more direct support for retail and services – in this way the whole economy grows together not just a few sectors. A broad-based recovery is a better recovery as it will inspire more confidence.

    Kind Regards
    Charlie

  2. Dafydd Hugh says:

    There are three key points which Labour is failing to get across strongly enough at the moment:

    1. Expectations are crucial in determining economic outcomes. The Tory-led government came in with such strong “cuts needed immediately” language that expectations in the economy quickly shifted and many organisations in the private sector have held back investment decisions as a result.

    2. Even one quarter of negative or flat growth in itself is dreadful for public finances. The Tory-led government policy is bad in its own terms – it is making the deficit worse not better.

    3. The cuts are yet to hit.

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