Newspaper article The Evening Standard (London, England)

UK Recovery Still Looks Dangerously Lopsided; ECONOMIC ANALYSIS

Newspaper article The Evening Standard (London, England)

UK Recovery Still Looks Dangerously Lopsided; ECONOMIC ANALYSIS

Article excerpt

Byline: Russell Lynch

OUR policy is to raise from the ruins of an economy built on debt a new, balanced economy where we save, invest and export." If you hadn't already guessed, these noble sentiments came from our own Chancellor, when he presented his emergency Budget in June 2010. George Osborne boasted of "a gradual rebalancing of the economy, with business investment and exports playing a greater role and government spending and debtfuelled consumption a smaller role". It all sounded great. Unfortunately when he steps up to the dispatch box next week, there's a very different tale to tell -- although in all likelihood he won't dare to tell it. I would expect the UK's 0.8% growth between July and September to feature prominently as the strongest advance among the world's developed nations in the most recent quarter -- as well as a deficit undershootbigger ing the Office for Budget Responsibility's [pounds sterling]120 billion borrowing target for the year by at least [pounds sterling]10 billion. What he won't be setting out is the evidence of the graph here, which shows the complete opposite of his vision sketched out three-and-a-half years ago. Despite the strictures of "austerity", Government spending has seen the strongest increase since the pre-recession peak of early 2008, up 4.5% in real terms.

Exports have managed anaemic growth and business investment is down more than 20%. Consumer spending is up 2.4% year-on-year and saw its strongest rise in three years between July and September. What this doesn't look like is a "gradual rebalancing" of our economy, which is still 2.5% below peak and performing worse than every country except Italy in the recovery stakes. …

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