Now that the spring sun is shining the government can blame the snow no longer and it is time that they owned up to the fact that it is their economic policies, not the weather, that have caused the economic recovery to stall to a halt. 

The government talks a lot about Labour’s economic legacy. But while the Tories want to trash Labour’s record, the fact is that the economy was growing a year ago and for the first three quarters of 2010 it looked like economic recovery was taking root, with unemployment down, growth up and borrowing down too.  It is the austerity programme, going too fast and too far that has reversed that trend, and the Conservative-led government, and their Liberal Democrat allies, who reneged on their election promises not to hike VAT or cut frontline spending, who must be held to account for the reversal of these trends now. 

Families squeezed by rising prices and wage freezes know there is a problem.  Pensioners struggling with rising fuel prices and low savings rates know that the government’s policies are hurting.  And small businesses who can’t get the banks to lend know that the government’s promises about being tough on bank lending just aren’t working.  That is why a little over a month ago the chancellor delivered what he optimistically called his ‘Budget for Growth’.   

The problem is that there was little in the budget that will deliver the growth we need.  So unimpressed indeed was the Office for Budget Responsibility by the budget’s growth credentials that it promptly downgraded its forecast for growth in 2011, its third successive downgrade.  The reality is that every time the chancellor goes to the dispatch box estimates of the strength of the recovery recede. From an initial forecast in 2011 of 2.6 per cent, to 2.3 per cent after the emergency budget, 2.1 per cent post comprehensive spending review and 1.7 per cent now, this is hardly a ringing endorsement of the government’s economic policy.  And it now looks like even this growth forecast might be too optimistic.  The OBR forecast growth of 0.8 per cent in the first quarter of 2011 (surely, if the government was right that Q4s numbers were because of the snow, then we would see a big rebound), and so it is now entirely plausible that the 2011 forecasts will need to be downgraded for a fourth time. 

Remarkably, the chancellor welcomed today’s numbers, saying that ‘it is good news that the British economy is growing’.  This response smacks of utter complacency and should send shock waves to every business and family in the country that the government is not listening and has no plans to rethink its rigid economic dogma which is the cause of the halting of our recovery. 

While the government says it cannot deviate from the plans it has set out, as Jonathan Portes, director of the National Institute of Economic and Social Research has said: ‘Markets can, of course, be irrational. But there is neither a theoretical reason nor any empirical evidence to suggest that they are irrational in this particular way. Indeed, history suggests the opposite: that the real hit to credibility comes from sticking to unsustainable policies.’.  And Portes is, of course, right. 

And as Keynes once said ‘The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist’. This government is paying homage to David Ricardo and Milton Friedman, even when economists today including Paul Krugman, Joseph Stiglitz, Christopher Pissarides and Danny Blanchflower are openly questioning Osborne’s austerity economics. The government would do well to look at the data rather than an economic theory that has been found wanting.  

The reality is that you cannot cut an economy out of recession, and the best way to reduce the budget deficit is through jobs and growth, not through higher unemployment and business failures.  This month the true scale of austerity economics will begin to be felt, as leisure centres, libraries, sure start and daycare centres close their doors.  The recovery was running out of steam before the scale of the cuts was felt, so while the US, Germany, France and Japan continue to provide stimulus and support for the fragile recovery, recognising that cutting before the recovery is embedded risks choking off private demand too. Here in the UK the government is taking a reckless gamble with our nation’s prosperity at the expense of families, businesses and pensioners all struggling to make ends meet. 

Instead of an arrogant complacency, we need from Cameron and Osborne a plan to stimulate growth in the regions and get people back to work. It is time to end the Greek myths, excuses about the wrong type of snow and scaremongering about Portugal, and come up with a Plan B that will help build a strong and sustainable recovery. Today’s numbers should have been a wake-up call to the government, a time to admit that their policies are hurting but are not working, and to put in place a real budget for growth.