Coalition catches up to the disarray of their economic policies
It hasn't taken long for the OBR's forecast, published last Wednesday, to look out of date. Downward revisions have been the watchword ever since the OBR was set up in May 2010. For example their forecast for growth in 2011 has been revised down five times, from 2.8 per cent to 0.8 per cent, while its forecast for 2012 has also been revised down four times from 2.6 per cent to 0.8 per cent. The latest ones assume all will be well from 2013 onwards -- that is, that there will be what economists call "mean reversion". Sadly, that looks like more wishful thinking.
Now less than a week later, data published on Thursday and Friday of last week, in the two days after the Budget speech, already suggest the OBR's latest forecast is overly optimistic. Growth looks likely to have slowed once again and may well now be negative in Q1 2012. Such green shoots as there were have now been stomped on, suggesting that the UK's growth performance is set to worsen again. This is in addition to the bad borrowing data and the weak report on the economy by the Bank of England's agents, both published on the morning of the Budget. These
new data releases are of particular relevance given Monday's final day of Budget debate in the House of Commons. This time, the OBR's forecast fell apart after only two days.
The new evidence suggests that retail sales have slowed sharply, consumer confidence is falling again, and housing market activity has slowed -- which suggests house prices are set to drop again. There is every prospect the economy has already entered a double-dip recession: GDP growth in Q1 2012 is probably going to be a small negative number. Osborne's claim that he has little wriggle room, supported by most of the media, is only true under his plans.
Better than picking my 84 year old mum's pocket to pay for tax cuts for millionaires, the Chancellor should scrap his ridiculous austerity plans and invest in jobs.