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Left Foot Forward > Published by Will Straw, July 26th 2011 at 9:45 am

Growth in 2011 set to be less than half OBR’s original prediction

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This morning’s growth figures show that – as expected – the economy grew by just 0.2 per cent in the second quarter of 2011. Given that the economy flat-lined in the six months after September, it means that growth has been anaemic for the last nine months as the chart below shows.

The OBR’s latest prediction for 2011 growth of 1.7 per cent now looks virtually impossible to achieve. Even if the economy gets back on track in Q3 and Q4, 2011 growth will barely hit 1.2 per cent – under half its original prediction of 2.6 per cent which it made in June 2010. The OBR has already been forced to downgrade its growth predictions on three previous occasions and will have to do so for a fourth time when it releases its forecast evaluation report in the autumn. Alongside this, they will be forced to raise their borrowing predictions.

UK-GDP-2006Q1-2011Q2
Today’s figures drive a coach and horses through George Osborne’s strategy. He has said on many occasions, including in an FT article (£) last March co-authored with Jeffrey Sachs, that fiscal retrenchment would stimulate the economy through increased consumer and business spending as a result of higher confidence and reduced borrowing costs.

Instead, cuts that are too fast and too deep are exacerbating the unfavourable economic headwinds caused by what the ONS has termed “special events” such as the additional bank holiday, the Royal Wedding, and warm weather in April.

The sluggish growth was not unexpected. As I wrote on Comment is Free yesterday:

“In the last month alone consumer confidence dipped, lending to businesses fell, manufacturing hit a two-year low, the service sector contracted, retail sales struggled to rebound after a big drop last month and the trade deficit widened.”

George Osborne is being urged by Number 10 to kick-start the economy. The question when will they accept the inevitable and concede that a Plan B is the only way to do this.

  • http://twitter.com/johnwest_journo/status/95776925359943681 John West

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://twitter.com/falseecon/status/95776944024600576 False Economy

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://t.co/VsPKJsT #falseeconomy

  • http://twitter.com/shamikdas/status/95776984185044993 Shamik Das

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://twitter.com/maximmanchester/status/95777014706999296 Max

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://twitter.com/shamikdas/status/95777209708580864 Shamik Das

    @clairee_french Here's Will's analysis: http://www.leftfootforward.org/2011/07/george-osborne-growth-q2/ Hope the blogging goes well!

  • http://twitter.com/brianfmoylan/status/95777625863225344 Brian Moylan

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://twitter.com/surrealpolitics/status/95778154483953664 Surreal Politics

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://twitter.com/brumprotestor/status/95778436097916929 Brummie Protestor

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://twitter.com/ippr_aglennie/status/95781573877694464 Alex Glennie

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://twitter.com/shriekinleek/status/95781697462878208 Bill Cawley

    Terrible and I imagine in an area like North Staffs in reality its a minus figure http://fb.me/uZ3nl9Ep

  • http://twitter.com/shriekinleek/status/95782169020080128 Bill Cawley

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://twitter.com/trouse11/status/95784763272593408 Tom Rouse

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction http://t.co/kyaXgJj

  • http://twitter.com/therightarticle/status/95786340473520128 Michael

    Growth in 2011 set to be less than half OBR’s original prediction l Will Straw l Left Foot Forward – http://j.mp/oun10C

  • http://twitter.com/mustberead/status/95792220745109504 MustBeRead

    From @WDJStraw on @LeftFootFwd: Growth in 2011 set to be less than half OBR’s original prediction http://t.co/GgfRYBd

  • http://twitter.com/kevinmckeever/status/95793887788023808 Kevin McKeever

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://twitter.com/guyshrubsole/status/95794911605039104 Guy Shrubsole

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction http://t.co/ZjfOGZ5

  • http://twitter.com/lenarthur2/status/95796498515755008 Len Arthur

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • damon brown

    Would be interesting to see the geographical breakdown and or business area breakdown for this and see where the losses and gains really are. Or who is losing and who is profiting form this scorched earth policy… hmmm I wonder?

  • anyleftiwonder

    Hats off to the well educated twerps who manage to find all these excuses. Still – millionaires row will not be affected – bankers – private healthcare – the Tory cabinet etc. Have to hope the next general election comes sooner than expected before our country goes to the dogs.

  • http://twitter.com/alexsmith1982/status/95814572333740032 alexsmith1982

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction http://t.co/5hjggG9

  • http://www.leftfootforward.org/2011/07/2011-q2-growth-figures-implications-for-living-standards/ Low growth implications for living standards particularly bleak | Left Foot Forward

    [...] morning’s weak Q2 stats (pdf) would be worrying in any recovery. But in the aftermath of such a deep fall in [...]

  • http://twitter.com/arbolioto/status/95821477970055169 Pabs

    Growth in 2011 set to be less than half OBR’s original prediction l Will Straw l Left Foot Forward – http://j.mp/oun10C

  • http://twitter.com/kcrayner/status/95821884771414016 Kaisie Rayner

    RT @leftfootfwd: Growth in 2011 set to be less than half OBR's original prediction http://t.co/5hjggG9

  • Alan W

    So in December it was the snow and in April it was the sunshine. Perhaps Osborne could enlighten us as to precisely what kind of weather the economy needs in order for his “expansionary fiscal contraction” to start working.

  • http://www.moregoodstuff.info/uk-gdp-figures-released-live-coverage UK GDP figures released – live coverage | moregoodstuff.info

    [...] estimates that the UK will only post growth of around 1.2% in 2011, even if the economy gets back on track in the second half of this year. In modern terms, 1.2% [...]

  • http://www.leftfootforward.org/2011/07/dismal-growth-figures-leave-many-parts-of-britain-languishing-in-the-deep-freeze/ Dismal growth figures leave many parts of Britain languishing in the deep freeze | Left Foot Forward

    [...] allowing for any subsequent revisions, today’s growth figures (pdf) are a dismal reminder of just how slow and uneven the Tory-led government’s ‘recovery’ has been. Three [...]

  • http://www.leftfootforward.org/2011/07/populus-poll-public-more-concerned-than-not-about-cuts-jobs-prices/ Public more concerned than not about cuts, jobs and prices | Left Foot Forward

    [...] this morning’s growth figures (pdf) undewhelming at best, the latest Populus poll on public concerns, carried out from Friday-Sunday, makes for more [...]

  • http://twitter.com/nobiggovduh/status/95899275187322880 NoBigGovDuh

    Growth in 2011 set to be less than half OBR's original prediction reports @wdjstraw http://bit.ly/mYLmaE

  • http://www.leftfootforward.org/2011/07/institute-of-directore-wales-feels-like-its-back-in-recession/ IoD: Wales feels like it’s back in recession | Left Foot Forward

    [...] economic growth was registered at just 0.2 per cent between April and June, rather than contrition, the prime minister, speaking at a training centre [...]

  • http://www.leftfootforward.org/2011/07/tory-immigration-populism-costing-gbp3point4bn/ How Tory immigration populism is costing us £3.4 billion | Left Foot Forward

    [...] figures of 0.2 per cent GDP growth show the UK’s climb out of recession to be uncertain and sluggish. It seems the Home Office [...]

  • Leon Wolfson

    It is getting to be “wrong kind of leaves on the line” isn’t it.

    Oh well, on the bright side the workings of the Office of Budgetary Fiddling, and their refusal to properly extrapolate growth trends (hence the constant revision) based on government policy…

  • http://www.leftfootforward.org/2011/07/tory-rights-deregulation-zealots-threatening-uks-green-growth/ Tory Right’s “deregulation zealots” threatening UK’s green growth | Left Foot Forward

    [...] out yesterday as growth figures grabbed the headlines, was the news the people dubbed “deregulation zealots” and “right wing [...]

  • http://www.leftfootforward.org/2011/07/has-the-coalition-lost-the-plot-on-growth/ Has the coalition lost the plot on growth? | Left Foot Forward

    [...] the depressing growth figures on Tuesday, coalition big wigs have been keen to offer their hapoth’s worth to [...]

  • http://www.leftfootforward.org/2011/07/enterprise-zones-are-the-dusting-down-of-a-failed-thatcherite-policy/ Enterprise Zones are the dusting down of a failed Thatcherite policy | Left Foot Forward

    [...] the economy running on empty and no Plan A or Plan B from Cameron, Osborne and Cable, the government have turned the [...]

  • http://www.leftfootforward.org/2011/07/coalitions-flagship-growth-policy-is-total-flop/ Coalition’s flagship growth policy is “total flop” | Left Foot Forward

    [...] the economy had grown by just 0.2 per cent in the second quarter of the year and indicated that growth for 2011 was likely to come in at half the level originally predicted by the Office for Budget Responsibility in June [...]

  • Liam McClure

    I have been working with Oxfam Scotland on a project called the Humankind Index which looks beyond GDP as the main measure of growth and looks to what people really think is important for them to live a happy, sustainable life. I thought you might be interested in having a look. Here is the link – http://www.oxfam.org.uk/humankindindex

  • http://www.leftfootforward.org/2011/08/new-imf-boss-joins-calls-for-plan-b/ New IMF boss joins calls for Plan B | Left Foot Forward

    [...] in the second quarter of the year. Last week French growth ground to a halt while British growth hit just 0.2 per cent over the same period – forcing the Bank of England to downgrade its growth forecast for [...]