Back up work, the economy growing again! Perhaps a bit of a surprise, though, to the influential International Monetary Fund which warned, only a few months ago, that the Chancellor was playing with fire by not easing off on his spending cuts when our economy was flat as a pancake.
So, was the IMF wrong?
Olivier Blanchard, Chief Economist, IMF: “I think it was true at the time. You know, nobody thought that, uh, consumers would certainly go on a spending spree. So at the time, it looked risky. Now, in retrospect…no, it was probably not playing with fire but at the time, we didn’t know and I think it was a reasonable call.”
And is the man who lives here smug that he ignored the IMF’s council?
George Osborne, the Chancellor of Exchequer: “Well we had some advice to avoid taking the difficult decisions in Britain but we rejected that advice. We rejected the quick fixes and the easy options and by working through our plan we are delivering economic security for the hard working people of this country and that’s reflected in the good news today.”
Although we don’t, yet, have the official figures, growth last year was probably around 1.8 percent but at the end of 2013 the recovery accelerated and that’s why the government’s official forecaster, The Office for Budget Responsibility and now the International Monetary Fund, are expecting growth this year, 2014, of 2.4 percent. However, many economists think they’re still too pessimistic. The powerful bank of England expects growth of 2.8 percent and the US bank, Citi, is expecting the kind of growth we enjoyed in the boom years: 3.2 percent.
But gratifying as it is we’re growing again, there may be bumps in the road. Too much of the UK’s recovery is arguably based on consumer spending, shopping, rather than investments and is vulnerable to rises in interest rates. There’s a disturbing widening of the deficit between what we buy from the rest of the world and what we sell abroad. And the Labour Party wonders when we’ll enjoy the recovery in our pockets.
Ed Balls, Shadow Chancellor: “After three years of flat-lining, any growth is good news but for most families with their living standards still falling, this is no recovery at all.”
Unlike economies doing worse than us right now, Britain’s national income is still less than it was at the time of the 2008 crash. Our recovery is real but it will be some time yet to where, again, we will be as rich as we were before it all went so horribly wrong. Robert Peston, BBC News.