Osborne under pressure as revised economic figures show UK slump worse than thought


By Martin Kelly

The Conservative/Lib Dem coalition has come under increasing pressure to take action after revised figures showed the UK economic slump to be worse than thought.

The new figures released by the Office of National Statistics (ONS) show that the UK Gross Domestic Product dropped by 0.3% last quarter, fifty per cent worse than the original 0.2% estimate.

The new ONS figures also reveal that the construction sector slumped by 4.8%.  The revised figure is a staggering 60% worse than the initial figure of 3%.

The figures will come as a blow to Chancellor George Osborne who this week was forced to defend his Government’s economic strategy.  The first quarter figures confirmed the UK had re-entered a recession.

The UK slump has prompted calls for Mr Osborne to reconsider his austerity measures and plan for a change in direction.

This week the International Monetary Fund said that the UK Coalition needed to do more, warning that the UK faced “substantial contractionary shock” if nothing was done.

Christine LaGrande, Managing Director of the IMF, urged Mr Osborne to start considering an alternative and gave a long list of actions which she believed the UK Chancellor should be taking.

She said: “Unfortunately the economic recovery in the UK has not yet taken hold and uncertainties abound”, adding that “growth is too slow and unemployment – including youth unemployment – is too high.  Policies to bolster demand before low growth becomes entrenched are needed.”

Today’s figures were seized on by the SNP who again insisted that funding needed to be made available for so called ‘shovel ready projects’.  The list of Scottish projects was submitted to the UK Government prior to the budget, at the behest of PM David Cameron, however Mr Osborne’s budget ignored the request.

SNP Treasury spokesperson Stewart Hosie MP appealed for the UK Government to increase capital spending to support the list of ‘shovel- ready’ projects published by the Scottish Government.

In a statement issued today, Mr Hosie said:

“These worse-than-expected figures leave the coalition with no more excuses – a change of course is needed to boost jobs and growth.

“The double-dip recession is a direct result of a fall in output in the construction industry – and now we know it’s worse than previously thought.  This is at a time when the Scottish Government has consistently called for investment in ‘shovel-ready’ projects.

“The figures come in the same week the IMF called for a plan B from the UK Government, and there was a worse-than-expected slump in retail sales.  It’s yet more evidence that the Tory-Lib Dem austerity agenda isn’t working.

“The coalition has its priorities all wrong.  At a time when we need capital investment to support employment, help small business and promote economic security, the budget centre-piece was tax breaks to the rich.

“Today’s figures should be the final nail in the coffin for the Tory-Lib Dem austerity agenda which is choking back economic recovery.  The coalition must increase infrastructure spend to boost jobs and growth – starting with the Scottish Government’s 30 “shovel-ready” projects which are ready to go across Scotland.”

The Scottish Government are requesting £302 million be made available to fund the infrastructure projects that are ready to go, and have claimed that over 4000 jobs would be created.

Yesterday, speaking in an interview with the Financial Times, Deputy PM Nick Clegg signalled that the UK Coalition was planning a “massive” infrastructure boost to help the ailing economy.