“Our complacent and out of touch Prime Minister and Chancellor have spent the last week claiming their plan is on track, but these figures show that Britain’s double-dip recession is even deeper than first thought.
“Not only has our economy now shrunk in the last six months by 0.6 per cent, it has actually shrunk by 0.4 per cent in the year and a half since the spending review. And it is families and businesses that are paying the price with incomes being squeezed, companies going bust and long-term unemployment at a 16 year high.
“It’s now clear that this is a recession made in Downing Street by this Government’s failed policies. Despite all the problems in the euro area, France, Germany and the eurozone as a whole have so far avoided recession and only exports to other countries stopped us going into recession a year ago. The result is that Britain is now in a weaker position if things get worse in the eurozone in the coming months.”
Ed Balls added:
“It did not have to be this way. The Government was warned that cutting spending and raising taxes too far and too fast would choke off the recovery and backfire on the deficit. That’s exactly what has happened with no economic growth and high unemployment leading to borrowing going up rather than down last month. The Government is now adding £150 billion to the national debt just to pay for economic failure.
“There is a better way. If we’re to successfully get the deficit down we need a balanced plan – tough but fair decisions on tax, spending and pay together with urgent action now to get the economy moving again. This is what the IMF warned would be needed a year ago if the economy under-performed. They said the government should prepare a plan B of temporary tax cuts and investment in infrastructure, as Labour has called for in our five point plan for jobs and growth.
“Now that things have got worse and Britain is in an even deeper double-dip recession, when will David Cameron and George Osborne finally take action? If we see slow growth and high unemployment being entrenched for months and years to come, families and businesses will pay a heavy long term price. There is a better way, but there can be no more complacency and no more excuses for delay.”
Notes:
1. In the 18 months since the spending review in the autumn of 2010 the UK economy has shrunk by 0.4 per cent.
2. The US economy is now 1.3 per cent above its pre-crisis peak. The UK economy is 4.4 per cent below.
3. David Cameron and George Osborne have claimed in the last week that the economy is “on track” and “in the right direction”.
“Despite headwinds from the Eurozone, we are on track.”
“We are moving in the right direction”
David Cameron, speech on the economy, 17 May 2012
http://www.number10.gov.uk/news/pm-economy-speech/
“We are heading in the right direction.”
George Osborne, Evening Standard, 22 May 2012
http://www.thisislondon.co.uk/comment/comment/the-storm-rages-but-the-imf-says-were-on-track-7778052.html
4. George Osborne said in November that if Europe was to enter recession it would be hard for Britain to avoid one. But the EU and the eurozone as a whole have so far avoided a recession, while Britain is already in one.
“But if the rest of Europe heads into recession, it may prove hard to avoid one here in the UK.”
George Osborne, Autumn Statement, 29 November 2011,
http://www.hm-treasury.gov.uk/press_136_11.htm
5. Labour’s five point plan for jobs and growth can be found at: www.labour.org.uk/plan
