The ONS has published new GDP data for April this morning. This is bad news for the Chancellor's claim to be creating growth, because the economy fell by 0.3% in April:
When the aim is positive news that is bad. It confirms three things.
The first is that, as Danny Blanchflower and I have been saying for some time, the UK economy is already in recession. This hardly seems worth debating any more.
The second is that the OECD growth forecast for this year, which I discussed on LBC last week, is wildly optimistic, as I said then.
Thirdky, the evidence from waking about us all that is needed to appraise economic reality: the state of the economy is apparent from people's sentiments, and it is not going to get better soon.
But what does this mean? I suggest, firstly, that the Bank of England needs to stop increasing interest rates now, and even cut them unless stagflation, destroyed hopes and destroyed livelihoods really are its goals, as I fear they might be.
Second, this is the time for more government spending not less.
But third, that spending must be in the economic transition that we need i.e. the Green New Deal.
With Colin Hines I have already explained the funding.
Now is the time for action, but the government's plan is to cut the civil service by twenty per cent, which is going to make the whole situation very much worse. Things can only get worse from here with the Tories in control.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Maurice McGrath
Absolute madness to cut the most stable part of the UK workforce, the wages of whom support SMEs in their day to day spending. And by 20%?
It’s almost as if the Chancellor is looking at the inflated returns from VAT and seeing this a cushion of sorts for an opportunity to further Tory ideology against the public sector in spite of good economics.
Are we really back in the “tighten our belts” fog when we need clear heads?
Apparently so
One could characterise the tory-s as implementing negative economic policy i.e policy that makes things worse.
One could then charactierise Lie-bore as having a policy vaccum &, speculating, they will take a neutral approach (if they ever get into power) – which will merely maintain the status quo (= crap) with a few modest tweaks (nothing too much cos the Daily Heil would get upset).
UK is in a very very bad policy situation.
Short of a move to some form of PR – I do not see things changing, certainly not with the collection of (mostly) imbeciles and chancers on the Liebore front bench.
like the austerity measures by osbourne which e.g lost us 20,000 police…
cuts in output and consumption are wholly necessary to reduce emissions. Continuous expansion cantor be reconciled with environmental depletion. Frankly i am surprised you are advocating expanding economic activity and not reversing it.
Why didn’t you read what I wrote?
Improving insulation in our homes is of course moving on the right direction as is more investment in wind and solar.. though the world remains massively reliant on nuclear gas and coal consumption to produce electricity until science produces an answer to store wind and solar in scale and for a meaningful time. That isn’t there yet and does not seem close. But frankly this is a sideshow compared to our carbon consumption elsewhere. Carbon is present in virtually everything that is manufactured. Then obviously there is food consumption and the nature of that consumption. The fact remains consumption and production of everything has to be massively scaled back.. the point to which the world would look very different. And quite frankly you worrying whether the UKs GDP slips by a fraction of a percent and then advocating measures for it to grow is not the rhetoric of a true environmental campaigner. Quite the opposite in fact.
I do not accept the criticism
Read my book The Courageous State to see I understand the issue
What I do not accept is that we can reduce consumption without considering distribution without causing massive harm
The government is not considering distribution so it has to be opposed for what it is claiming
Come on Lucy – not all areas of economic growth will harm the planet – if we expanded green initiatives that would help.
I am in hat eating mode.
Front page of the Times today: tories are going to reform the electricity market along the lines I have been suggesting.
Probably political desparation. But it will have an impact. It will reduce elec bills.
Legislation this year – apparently.
Just amazing.
Will it impact on recession – perhaps not. That said – what else might the tory-s pull out of a hat?
I have nit read it – do not pay Murdoch
Even though you say it “hardly seems worth debating any more”, could you explain further why you think the UK is already “in recession”? My understanding is that a recession is “a period identified by a fall in GDP in two successive quarters”. Quarters, not months… Many thanks in advance!
I am saying that the two quarters have already begun – so we are in recession now
Really rather simple