MAGGIE PAGANO: A recession would be Chancellor’s fault
Is Britain already in recession, or should one say, a ‘Reevescession’? The latest growth figures from the Office for National Statistics (ONS), which show the economy shrank by 0.1 per cent in the three months to October, suggest we are close.
Technically, the definition of a recession is two successive quarters of negative growth.
But as economist Julian Jessop says, if you look at broader-based falls in activity then, yes, we are in a shallow recession with gross domestic product (GDP) falling for four months in a row.
What’s more, the economy has contracted for nine of the 16 months that Labour has been in power, including October’s GDP, which shrunk by 0.1 per cent.
‘Reevescession’: Business leaders and the opposition are blaming Rachel Reeves’ pre-Budget behaviour for the crisis in confidence
Why anyone is remotely surprised by the contraction is beyond belief. Anyone with an ear to the ground could tell that from September onwards the wild Budget briefings and leaks were killing off growth by undermining household and business behaviour.
It’s not only economists, business leaders and the opposition who are blaming Rachel Reeves’ pre-Budget behaviour for the crisis in confidence. Labour MP Dame Meg Hillier, chairman of the Treasury select committee, has launched the most astonishing critique of the Chancellor over the U-turn on raising income tax, describing it as a ‘glaring error’. Dame Meg oversaw this week’s grilling of Reeves, and she suggested she take responsibility for the chaos and accept her failings. Punchy stuff.
It’s now a racing certainty that the Bank of England will cut interest rates on Thursday. The question is, by how much. Most economists expect a 0.25 percentage point cut, down to 3.75 per cent.
Yet others argue the Monetary Policy Committee should slash rates to 3 per cent to kick-start the economy – despite inflation staying stubbornly high at 3.8 per cent.
But, as Jessop also says, if the prospects for the economy hinge on whether interest rates are at 3 per cent or 4 per cent, we are truly doomed.
Even Christmas sales are looking bleak. A black-cab driver tells me he and his colleagues reckon that footfall in the usually busy West End is down by about two thirds.
There is a way forward, but that would require the Chancellor tearing up all her damaging fiscal policies from last year and, indeed, pulling apart many of those of her Tory predecessors. But that’s not going to happen. As Labour proves on a daily basis, it doesn’t have a clue about what makes either households tick or businesses grow.
Pressure on Miliband
There is one rare chink of light, which is that Ed Miliband’s insane Net Zero policies are coming under increasing attack from unlikely sources.
First, the EU’s decision to drop the proposed ban on petrol and diesel by 2035 due to Germany and Italy’s pestering is bound to pressure the UK to follow suit.
Second, the recent National Energy System Operator report that says reaching Net Zero by 2050 will cost £350billion – £500 per household per year, or 0.4 per cent of GDP.
There simply isn’t the money for such an unnecessary extravaganza. Such spending will bankrupt the country. With luck, Miliband will soon be eating humble pie along with his favourite bacon sarnie.
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