The figures mean the economy is still years away from returning to 2006 pre-crash levels. The figures also tell a story of real-terms falling wages – not just eaten by inflation – and widespread consumer wariness before huge levels of public sector job cuts actually begin to bite.
Chancellor George Osborne and Prime Minister David Cameron insisted that the positive figure meant the economy is growing but neither man sought to insist – as the Office of National Statistics did – that the royal wedding, bank holidays and Japanese tsunami in Fukushima depressed economic activity by as much as
0.5 per cent.
Both did, however, cite wider global economic factors out of the UK’s control for the sluggish growth. Jobs were being created and the services sector appeared to be bouncing back, they insisted.
But Shadow Chancellor Ed Balls – who said Labour also believed in a credible deficit reduction strategy – said the depressed economy meant borrowing had to increase because of the reduced tax take.
He said Labour’s alternative was a slower-paced, more balanced deficit reduction, and recommended that VAT be restored to 17.5 per cent for at least a year and a so-called bankers’ tax with receipts targeted towards youth job creation. He saw no reason to seek to reduce the 50 per cent upper tax band at a time people were struggling with soaring utility bills and other household expenses.
Unite’s general secretary Len McCluskey said the British economy was now so sluggish it made Monty Python’s dead parrot look like sprinter Usain Bolt. The Government was tackling a crisis caused by neo-liberal economics with the totally unsuitable tools of neo-liberal economics, he said.
It should stop removing demand from the economy by cutting jobs, use the state’s investment in rescued banks for investment – a recommendation the political establishment simply ignores, he said – and focus on boosting the country’s manufacturing base. The imminent closure of Britain’s last train factory, Bombardier in Derby, showed how little weight had been attached to manufacturing thus far, said Mr McCluskey.
TUC general secretary Brendan Barber said: “The detail in the figures is even more worrying. There is no sign of an export-led recovery, with productive industries falling by 1.4 per cent, and the cuts are now beginning to bite as the Government made no contribution to growth last quarter.
“The big worry must be that we are now trapped in a stagnant economy with such damage done to both business and consumer confidence that growth – which provides the only real long-term solution to the deficit – is receding into the distant future.”
