Today’s growth figures are a problem for George Osborne. It’s basically part of his job description to nurture growth — but, looking at the graph above, he’s not having much joy in that. Even allowing for the fact that without one-off shocks such as the Japanese tsunami and the Royal Wedding Q2 growth might have been 0.7 per cent, instead of 0.2 per cent, the Chancellor has some convincing to do. Describing today’s figures as “positive news”, as he did, was not the best start, especially with inflation soaring ahead of people’s spending power.
But although those are the facts of life for Osborne, there are reasons for him — and us — to take a step back from this 0.2 percent figure. The first is the one I mentioned earlier: that there are parts of the country that have effectively been stuck in recession for decades. They are still stuck in recession now, whether the overall economy is growing or not. If Ed Balls and others put half as much energy into wishing those places out of their collective slump as they do into this quarterly bloodsport, then we might be getting somewhere.
The second is the simple fact that recoveries are rarely straightforward, particular when they require a grand shift away from some toxic addiction such as debt. As disheartening as it is, recoveries zig-zag, they sway, and all on the way to some largely unforeseeable end point. What these quarterly growth figures show us is the faltering journey, not the destination. Not even annual growth forecasts can do that, although they do give a broader sense of things. Here then, for the record, are the latest average independent forecasts for this year and the next few, as collated by the Treasury:
Are those forecasts probable? Are they even possible? This is why the Chancellor might even now be thinking of bulking up his growth agenda, to ease the odds in his favour.
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