And so it begins....
The UK has been in a recession, six months of a declining economy. The last three months figures were much worse than predicted, people are suffering.
But already the fight back has started.
“This is in the past”, a brilliant oft used ploy. Avoid all criticism and analysis by saying the data is old. Which ignores the inconvenient truth that it is the latest data, fresh from the statisticians.
Then there is the “this is only a technical recession” ploy; as if it is nothing to worry about, just some numbers, there are other numbers available, there are other definitions of recession. Nothing to see here.
My favourite is “we have turned the corner” Since it will take months to find out if things are actually getting better or worse and it would be a very deep recession if they didn’t improve -this gives the government months to predict the “medicine is working” another one we will hear a lot about.
All of that is in the politician’s playbook and has been for centuries but there are two really worrying things about this downturn.
The first is that this is the recession in the middle of a long period of weak or non-existent growth. We have been bouncing along the bottom for years and this is just a sign that things are getting worse not better. Where is the period of sustained high growth, that makes the occasional recession manageable? It is deeply concerning that it hasn’t happened in years and is not predicted for years either.
The second is that the Chancellor and his government are so ideologically driven, so stupid and so desperate to stay in power that their solution is to slash spending even further to fund tax cuts.
As I have said often enough there is no proof that cutting taxes boosts growth, but slashing guaranteed spending in a recession is a recipe for a longer recession.
Also there is a greater risk, even the current pencilled in spending cuts are totally unbelievable, no one thinks they are manageable or feasible. More will stretch credibility to breaking point.
Remember Liz Truss thought she could announce huge unfunded tax cuts and the market woke up and paid attention.
She was out of office in a couple of weeks but the damage lingers on, as does the markets’ memory.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media