GDP figures show failure of UK government’s economic plan

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By a Newsnet reporter

Commenting after the release of UK GDP figures by the Office of National Statistics on Wednesday SNP Treasury spokesperson Stewart Hosie MP said downward revision underlined the urgent need for the UK Government to increase capital investment to boost employment.

The figures showed that the UK economy shrank by more than anticipated in the fourth quarter of last year as households reined in their spending.  The ONS said that the UK  economy contracted by a quarterly rate of 0.3% between October and December, up from the previous estimate of a 0.2% decline.  The poor figures came as a surprise to market analysts, who had expected no change in the estimate.

GDP grew by 0.7% during the year as a whole.  The UK government expects that the economy will perform only slightly better this year.  Financial analysts believe the economy returned to growth in the current quarter, but Bank of England Governor Mervyn King warned that during 2012 the UK economy will be characterised by a “zig-zag” of up and down quarters.

Mr Hosie, a member of the Treasury Select Committee, said:

“The Budget failed to deliver on the key measures that we need to help economic recovery, and these GDP figures are further evidence of why we now need an urgent change in direction by the Treasury.

“While the economy flatlines, it says everything that the wrongheaded Tories are determined to press ahead with a tax cut for millionaires.

“George Osborne’s austerity strategy is failing, yet many of the Tories cuts are still to come.

“Last week’s budget showed that the UK Government remain wedded to the austerity cuts that they have introduced and now want them to last longer and cut deeper than originally planned. Unless they listen to the Scottish Government, they will make the situation worse.

“The UK Government has its priorities all wrong. While hard-working households and businesses feel the impact of these cuts, the Tories want to give tax breaks to the rich – and incredibly Labour didn’t even vote against it!

“The SNP have argued right from the start of the economic crisis that capital investment is the best way to keep the economy moving and keep people in work.

“Unfortunately, the UK Government is not listening – and that, once again, shows why Scotland needs to secure real economic powers.”