Only Portugal and Romania have grown more slowly than UK in last year

Ed Balls MP, Labour’s Shadow Chancellor, said in response to today’s EU growth figures:

“These latest figures for economies across the European Union are a real cause for concern. They show that while there has been a slowdown in many countries in recent months, over the last 12 months only Romania and Portugal have grown slower than the UK. The British recovery was choked off last autumn well before the global market turmoil we have seen in recent weeks.

“It’s time George Osborne got out of his denial and admitted that Britain now faces a growth crisis, as a senior Minister let slip this week. And he should listen to the head of the IMF and one of the largest investment funds in the world who have warned that cutting too far and too fast risks economic recovery.

“Without strong growth and more people in work it will be harder to get the deficit down. That’s why we urgently need leadership from the Chancellor on the world stage to agree a global plan for growth and a more balanced deficit plan here in Britain.

“Temporarily cutting VAT and using the money raised from a tax on bank bonuses to get young people off the dole and into work would help get our flatlining economy growing again and so help get the deficit down in the medium-term. As Christine Lagarde has rightly said ‘growth is necessary for fiscal credibility’.”


Editor’s Notes:

1. Figures published by Eurostat this morning show the change in economic growth, where data is available, for each EU country compared to a year ago (last column of page 3 here:

2. Last month the managing director of the International Monetary Fund Christine Lagarde said:

“growth is necessary for fiscal credibility—after all, who will believe that commitments to cut spending can survive a lengthy stagnation with prolonged high unemployment and social dissatisfaction?”
Christine Lagarde, Managing Director of the International Monetary Fund, speech at Jackson Hole, 27 August 2011

“For the advanced economies, there is an unmistakable need to restore fiscal sustainability through credible consolidation plans. At the same time we know that slamming on the brakes too quickly will hurt the recovery and worsen job prospects. So fiscal adjustment must resolve the conundrum of being neither too fast nor too slow. Shaping a Goldilocks fiscal consolidation is all about timing. What is needed is a dual focus on medium-term consolidation and short-term support for growth and jobs.”
Christine Lagarde, Managing Director of the International Monetary Fund, Financial Times, 16 August 2011,

3. In an interview with yesterday’s Times the managing director of PIMCO said:

“The economy in the UK is worse off than it was when the plan was developed, so there should be at a minimum fine-tuning and perhaps re-routing of the plan… the problem becomes if it is too quick and swift and leads to an economic contraction, which it appears close to doing in the UK. Bond investors obviously want not just low inflation but some type of positive growth. An economy that doesn’t grow, like Japan, ultimately can’t resolve its debt crisis, either… The UK is actually in the best position of all to make a mid-course correction… a mild re-adjustment that might keep the economy out of recession would be viewed very favourably”.
Bill Gross, managing director of PIMCO, The Times, 5 September 2011,

4. Planning Minister Greg Clark MP told the House of Commons yesterday:

“we have a crisis in housing and growth in this country”
Hansard, 5 September 2011, column 12

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Posted September 6th, 2011 by Ed's team