No growth, just six months of stagnation

By Mark Ferguson / @markfergusonuk

Yesterday I said that the chancellor would need to produce something good if he was to prove that the austerity measures are working. Growth of 1.7% – or 1.2% growth over six months – would suggest that contrary to Labour’s attacks, the chancellor’s strategy was paying off.

It clearly isn’t.

“Growth” of 0.5% takes us back to where we were at the end of September 2010. What a fantastic achievement George, to have reversed the damage caused in the final three months of the year, when your economic policies (and, of course, a bit of snow) saw the economy contract. His response – to maintain the VAT rise, has strangled growth. We’re bumping along with a stagnant economy, and the bulk of the cuts haven’t even hit yet. Quarter two – which will include the first months of heavy public sector cuts – could be very ugly indeed.

Today the government are grasping at decent manufacturing growth as a potential lifeline. The problem with that though is that manufacturing is a very small part of our economy, so any growth is starting from a low base.To put it another way, we used to make things in this country. Our manufacturing industries were the pride of communities. Then – largely due to Tory polices – those industries were decimated. Now the same party turns around and uses manufacturing growth as a shield against poor growth. What chutzpah.

Osborne has avoided a double dip recession – for that, we should say well done, I suppose – but the task is to rebuild the British economy, not avoid disaster. Brown and Darling were the ones who stopped the British economy crashing irreversibly during the global financial crisis. Osborne and Cameron sold themselves as they guys to clear up the mess and build the economy back up.

Things are still looking pretty messy from where I’m standing. And without a change of course, it’s hard to see where the sustained growth needed is coming from. Yesterday I said if Osborne was achieving growth then Ed Balls and his team should ask “at what cost?” Yet growth is stagnant. This is the best the Tories can achieve with nearly a year of power.

And at what cost?