Wednesday, 25 July 2012

No growth area

The economy is still in deep trouble. Just published are the official figures by the Office for National Statistics that show that the economy has shrunk for the third quarter in a row. The economy shrank by 0.7% in the last three months.
This shrinkage is much larger than most economist’s were expecting. Most thought the figure would be nearer 0.2%. 
This follows a drop of 0.3% in the first three months of the year.
It is traditional to find a scapegoat for such disastrous figures and true to form thy’ve done it again. This time it’s the Queen. The fact is we’ve all taken time off to celebrate her jubilee. Naughty us. And of course that perennial stand-by the weather. It rained.
The biggest fall was in the construction industry. The building sector saw output fall by 5.2%. But manufacturing was also down by 1.3%, while services was down 0.1%.
Looking at the figures it is very unlikely that we'll be on the right side of zero growth this year. It is more likely the economy will be contracting.

These figure again underline that the coalition governments handling of the economy is proving disastrous. All reputable economists will say you don’t go for a policy of public expenditure cuts in a recession. The time to cut back is when the economy is growing. 
The government is repeating the mistakes that occurred in the Inter war years of last century. Are lessons never learnt from history?

The UK is now in the worse double dip recession for fifty years and still our Chancellor has no plan B. 


  1. 'The time to cut back is when the economy is in (sic) the growing.'

    And doubtless you were saying just this throughout the last thirteen years of Labour rule.

    No, now is precisely the time to cut, keep cutting and cut even more. The size of the 'State' cannot be justified, cannot be financed and cannot be allowed to continue.

  2. I agree that Labour should have trimmed back on the public sector between 1997 and 2003. But unemployment is high and production is low because "we" meaning consumers, businesses and government combined are not spending enough. It is at this time we need to spend to get things moving again. So if business doesn't and we consumers don't then that only leaves government. So government needs to start spending on capital projects to get confidence back hopefully! then business and consumer spending will pick up then and only then should government cut back.