David Cameron: The economy is growing!?

Watching Prime Ministers Question Time yesterday as David Cameron cheerfully announced UK GDP figures for the first quarter of the year I was reminded of the classic Monty Python comedy sketch about the dead Norwegian Blue parrot. Here a demented shopkeeper tries to convince a customer that the parrot he returned to the shop was not dead.

The customer complains, “ I wish to complain about this parrot what I purchased not half an hour ago from this very boutique.”
 
The shopkeeper answers : Oh yes, the, uh, the Norwegian

Blue...What's,uh...What's wrong with it?
 
An increasingly irate customer responds: I'll tell you what's wrong with it, my lad. 'E's dead, that's what's wrong with it!

Shopkeeper : No, no, 'e's uh,...he's resting.

Furious customer: Look, matey, I know a dead parrot when I see one, and I'm looking at one right now.

Much like the demented shopkeeper selling dead parrots the Prime Minister and his Chancellor George Osbourne sought to convince a sceptical nation that despite terrible GDP figures that showed the British economy as barely registering a pulse things were definitely on the up.

In the House yesterday the PM said in response to a question from MP Brian Binley MP expressing serious concern of the UK’s economic performance,

…”what is encouraging in the figures is that the British economy is growing once again, manufacturing is up, exports are up, and we are seeing a rebalancing of the economy so that we are not over-reliant on private consumption. That is good news.”

The PM warming to his theme continued unabashed, “It is clearly a success that the economy is growing. The figures out this morning show the economy growing in the first quarter of the year. They show manufacturing and exports up, and we have 400,000 more people in work in the private sector than we had a year ago. However, the right hon. Gentleman predicted a double dip. He said that we were going to get two quarters of negative growth, so when he gets to his feet, perhaps it is time to apologise for talking the economy down.”

The fact is the economy has seen no growth over the last 6 months and however 10 Downing Street tries to talk up this depressing sad fact the reality is clear for all to see. Our economy is stagnating and we are in real danger of suffering a double dip recession. In short the parrot is most definitely dead.

Here is the analysis of Joe Grice chief statistician of the Office for National Statistics ,  “The economy remains below the level of output recorded before the start of the recession (shown in the figure above). GDP has recovered about a third of the output lost during the recession. In the past two recessions it took just over three years for output to reach pre-recession level.”

What this means that not only are these GDP figures bad they are the worst recession recovery figures seen in a generation. Previous recessions in 1980’s and 1990’s saw economic output recover to pre recession highs in just three years.

Yesterday’s figures demonstrate that we have recovered less than third of our pre recession economic output. In 2010 the economy grew by 1.8% largely ion the back of Government spending in key areas of health and education.

It is my view that the currents cuts in Government spending have caused the current stagflation.

The amplified affect of this economy results in dramatic and continued downturns in the areas of construction Recent Government investment figures in construction confirm that spending in this area has reduced by as much as 19% in the last year alone.

The lesson here is simple and obvious the June Budget of 2010 has halted the potential economic for economic growth. In order for the UK to get back to the pre recession levels of growth would require the economy to grow by around 3.5% in the next year and I think we can all agree that’s not going to happen.

What we do know will happen is that unemployment particularly youth unemployment will continue to rise and that cuts to jobs and services in large metropolitan areas will cause huge tensions in inner city areas.

We are already witnessing a disproportionate impact on black communities as a result with huge numbers of black women employed in the public sector being represented in those being made redundant, welfare benefit reforms seem to have been targeted in a way that hits black and migrant communities the hardest, massive cuts to legal aid and the destruction of the black voluntary sector.

There has to be a budget that invests in communities not excoriates them to the bone. The GDP figures announced yesterday are not cause for cautious optimism they are the last rasping breath of an economy starved of investment. The consequences if we continue on this course will be devastating and the awful legacy will be with us for years to come. The Parrot Mr. Cameron is most definitely dead.

Lee Jasper is Co-chair of BARAC