Tuesday, January 26, 2010

Chancellor Sneaks in with One Budget Prediction (The 3.5% Myth Part 3)

Well the Chancellor must be breathing a slight sigh of relief. In his Budget speech  in April he said:
 "I expect to see growth resume towards the end of the year."
Well today's announcement is that the third quarter was one of growth, just, by a whoopingly small 0.1%. But it does mean that after 18 months of recession that monkey is sort of off the Chancellor's back. I suspect it is still clinging to his trouser leg though. So therefore he said we are on the path to recovery, though as George Osborne rightly points out this is "about as weak growth as you can get." However, Vince Cable hits the nail on the head:
"Far from the quick recovery the chancellor has been praying for, the economy is only just staggering back into growth."
Indeed it wasn't just his prayers but the predictions from Alistair Darling. As I reported back at the time, Darling had come up with figures for the recovery that greatly exceeded anything the IMF had in stall. Indeed I pointed out that the sustained 3.5% growth he predicted we'd get to, being a whole one percent over the mean sustained from previous recessions. But look also at the figure that the Chancellor came up with for 2009 as a whole:
"my forecast for GDP growth for the year as a whole will be -3.5 percent"
Well the actually figure was -4.8% so even the IMF were being generous in their prediction of -4.1%, but nowhere near as optimistic as the Chancellor was with his. So before Labour get too carried away about taking us out of recession and how well they did in doing so, lets not forget that in 2009 we still did worse than they promised we'd do and made just one of their predictions by the skin of their teeth.

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