Osborne’s latest boast is that Britain’s GDP grew by nearly 2% in the year to last September, showing a strong recovery from the two previous years when the economy barely reached 1%. This is highly misleading for several reasons. Will it be sustained when it is based on the fragile foundations of consumer borrowing and house price inflation, and when business investment, wages, productivity and exports – all the really essential factors needed – are all flat?
Even more important, this 2% growth is counted from a much lower level of output than would have been the case if Osborne austerity hadn’t stopped in its tracks the recovery already taking place in the middle and second half of 2010 as a result of Alistair Darling’s stimulus measures in 2009. If output had continued to rise after 2007 in line with previous trends, GDP would now be 20& higher than it is. Instead of preening himself with the 2% upturn, he should be humbly apologising for the 20% of output (worth nearly £300bn!) lost for good as a result of his ideologically-driven dogma of endless cutbacks. But humility and contrition are beyond Osborne.
He also has the gall to claim that Britain is now doing better than all comparable economies in the OECD. But that is simply not true: it is in fact doing worse. The US economy has recovered from an 8% fall after 2008 to a 5% rise above its previous peak by the third quarter of 2013. Germany had a faster initial recovery and is the only major European country to enjoy growth at 2% or higher; moreover it achieved that not by fiscal austerity (despite all the Merkel rhetoric), but by increasing public expenditure from 43% in 2007 to 45% in 2012. Japan, despite two lost decades of extended deflation, is the third of the major economies to have recovered its previous peak GDP. By comparison the UK is still 2% below its previous peak – though you’d never guess that from the Osborne spin. Even France, which has been lampooned over the previous year for its failures, has still nearly reached its peak, which the UK certainly hasn’t. How’s all that then for a bit of Osbornesque fabrication?
Then he has the nerve to pretend that this ‘recovery’ is the result of austerity. The opposite is the truth. The main source of what little growth there’s been in 2013 results not from cuts, but from public spending turning out higher than expected. The triple dip was only avoided by Osborne surreptitiously adopting the stimulus policy which publicly he so vehemently denounces. And now he even goes so far as to claim with breathtaking chutzpah that living standards are now rising. According to the government’s own ONS Labour Market Statistics between 2007-13 real wages fell by 7% in the private sector and by 5% in the public sector – the biggest fall in real wages in the longest recession since 1873. Anyone want to buy a used statistic from this man?