UK out of recession but still has 'a long way to go'
The 1 per cent growth figure recorded in the third quarter did surprise markets, which had expected a positive figure but nothing quite so good
FOR A CENTURY, Admiralty Arch has towered over The Mall in London. Today, it is empty, costly to maintain and threatening to fall into disrepair. Now, it is going to pay its way, leased to a hotel group for £60 million.
The opportunities for drawing analogies between the Arch, commissioned by King Edward VII in memory of his mother, Queen Victoria, in 1910, and the British economy are endless, particularly on a day when the latter moved out of recession.
“ is not being used and is costing £900,000 a year to run,” declared cabinet office minister Francis Maude, who has cut £362 million from the British government’s rent bill since 2010.
Once restored, Admiralty Arch, complete with the glories created by its architect, Sir Aston Webb, will be open to the public – or at least they will be for those who can afford its no-doubt highly priced bars and restaurants.
On Wednesday, prime minister David Cameron, clearly aware that yesterday’s official statistics would pull the UK out of its double-dip recession, chortled before Labour leader, Ed Miliband, saying: “The good news will keep on going.”
Such declarations by politicians usually end in tears, but the 1 per cent growth figure recorded in the third quarter did surprise markets, which had expected a positive figure but nothing quite so good.
The reasons for the result – one that has given chancellor of the exchequer George Osborne cause to cheer – are up for debate: the Olympics did have an effect, deterring some activity, but encouraging others. In all, it was plus.
Concerned that some would go too far with the figures, the treasury sent out speaking notes to ministers telling them, under no circumstances, to talk of “green shoots”, but to say only that the economy is healing.
Cameron struck to the line rigidly: “We still have a long way to go and there are still difficulties ahead, but I think these figures do show that we are on the right track, that we’ve got the right approach.”
For days before, Labour’s shadow chancellor, Ed Balls, had been softening up public opinion in advance of the figures, saying that, of course, the Olympics would have boosted the British economy.
Labour’s strategy – which argues that Cameron and Osborne should pump-prime the economy and drive for growth – will be in serious difficulties if yesterday’s figures mark the beginning of a trend.
Sticking to the “healing” message, Osborne – whose reputation has taken a terrible drubbing since a cack-handed budget in March – said there were still “plenty of risks” across the world, especially in the European Union.
“If we stick with what we’re doing, getting the deficit down, creating jobs, fixing the deep-seated problems in the British economy, then I think you can see now that it is going to deliver the kind of prosperity we want to see in this country,” he declared.
If anyone was in any doubt, the impact of the euro crisis on the UK’s economy was brought home with yesterday morning’s news that Ford is to close its plant in Southampton and another in Dagenham.
The Southampton factory had been living on borrowed time for years, even if staff felt betrayed yesterday because of Ford’s plan to consolidate all Transit manufacture in Kocaeli, Turkey.
The economic growth figures are the highest for five years, though some analysts said 0.5 per cent of that was down to the fact that the quarter did not have a repetition of the four-day Bank Holiday to mark the Diamond Jubilee that helped to scupper the second quarter’s figures.
Since 2010, the Conservative Liberal Democrat coalition’s strategy has been blinkingly simple to understand if difficult to implement: quick cuts, followed by a steady rise in fortunes as the 2015 election came closer.
Yesterday’s figures are far from proof that the strategy is working, particularly because the impact of most of the spending cuts planned by the coalition has yet to be felt. Nevertheless, they have come as a welcome relief for an administration in difficulties.
But life without recession will not improve dramatically overnight for the British people, who are £1,800 a year worse off than they would have been had the banking crisis not occurred.