The attempt by the Tory-led government to talk up recovery in the wake of the latest GDP data is entirely predictable. But the gulf between the propaganda and the reality of the British economy is now so wide that stagnation is being redesignated as recovery.

In the first estimate for the 4^th quarter Britain’s GDP grew by 0.7%. This may be updated or revised at a later date. From this supporters of austerity make a series of outlandish or spurious claims about the ‘recovery’.

In fact the British economy has not actually recovered its previous peak before the recession, unlike even the exceptionally weak recoveries elsewhere in the advanced industrialised countries. The Reuters’ chart below shows the performance of those economies since the 1^st quarter of 2008. Continue reading →

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. Continue reading →