These provisional GDP figures showing that the economy shrank in the fourth quarter have come as a shock, the consensus was for growth albeit at a slower pace than in the third quarter. These figures can, obviously, be significantly explained by the winter weather which brought the country to a halt. The ONS is saying that without the weather growth would have been flat.
George Osborne is stressing that he won’t be ‘blown off course’ by these weather-affected numbers. But it’ll be fascinating to see how Ed Balls responds to these numbers. Does he double-down on his warning of a double-dip recession—which would damage his credibility if it did not come to a pass—or does he play a more careful game?
For the coalition, the imperative now is to come up with a more vigorous growth strategy. If the private sector is to lead the recovery, there is going to need to be a substantial reduction in the burdens on businesses.
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