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Osborne warning on triple dip fear

By Western Morning News  |  Posted: January 26, 2013

Latest economic figures belie  David Cameron's claim at the end of last year that 'more good news' was expected

Latest economic figures belie David Cameron's claim at the end of last year that 'more good news' was expected

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The Government has been urged to re-think its austerity programme as Britain faces an unprecedented "triple-dip" in the economy by slipping into recession for the third time since 2008.

Official estimates yesterday revealed the economy shrank by a worse-than-expected 0.3% in the last three months of last year. Another quarter of negative growth and Britain will officially be in recession again.

Chancellor George Osborne, under pressure to adopt a "Plan B" alternative to his programme of cuts, insisted he would not "run away" from the problems facing the UK economy.

Job losses at Exeter airline Flybe and Bideford-based TE Connectivity have underlined how sluggish the economy of the Westcountry – heavily reliant on the stagnant service sector – is. The number of unemployed in Devon and Cornwall also rose last month.

Business leaders in the region conceded the Westcountry economy was "bumping along" but said there were silver linings, such as John Lewis's investment in Exeter.

Labour wants support for growth through VAT cuts and spending on infrastructure, and Liberal Democrat leader Nick Clegg acknowledged the cuts have hurt the economy.

Ben Bradshaw, Labour MP for Exeter, said: "These are truly dreadful figures. There's basically been no growth in the economy since this Government came in. Osborne's fanatical austerity drive killed the recovery and we are all paying the price in higher borrowing, squeezed incomes and lost jobs like those at Flybe this week. With even the IMF now warning the Government must change course, what will it take for Osborne and Cameron to admit their economic policy has failed and lies in tatters?"

But George Eustice, Conservative MP for Camborne and Redruth, said Mr Osborne "must stick to the plan".

"These figures have been expected for some time and underline the fact that the road to recovery is a difficult one and that this problem is shared by other developed economies too," he said.

"However, we have to live within our means and if we were to be irresponsible and spend money we don't have, then mortgage rates would jump and that would squeeze household incomes further. There have been some more encouraging signs with the number of people employed showing the strongest growth in 20 years and we must stick to the plan."

The fourth quarter decline in gross domestic product (GDP) marks a sharp reversal of the 0.9% rebound seen in the previous three months, and shatters Prime Minister David Cameron's claim at the end of last year that "more good news" was expected.

Mr Osborne is under pressure to do more to heal the economy in his upcoming March budget, while criticism will intensify if Britain loses its coveted AAA rating following warnings from credit agencies the status is at risk.

But the Chancellor insisted deficit reduction would continue, saying: "We can either run away from those problems or we can confront them and I am determined to confront them so that we can go on creating jobs for the people of this country."

Experts fear the fourth quarter decline has put the UK on course for the first triple dip since official records began. Westcountry business leaders attempted to remain defiant.

Kim Conchie, chief executive of Cornwall Chamber of Commerce, said: "Since 2008, businesses in Cornwall have been used to tough times. But in terms of a prospective triple dip, businesses in Cornwall have never really experienced the peaks, but have been bumping along. I don't think anyone felt that surge of optimism, before this third dip. So, it's not a case of a dip, but of grinding along, and a matter of confidence – and no politician has found the answer to that, yet."

Nigel Hutchings, chief executive of South West Chambers of Commerce, said firms have been "bumping along and it's more a question of confidence".

But he added: "A number of sectors are doing well, including aerospace and tourism will pick up. And – headline administrations apart – if you look at retail, there is always a slump at this time of year, even in the good times. So before we start running round and saying 'we're doomed' let's just wait for the next quarter and see what happens."

David Savill, council member of Exeter Chamber of Commerce, said its own survey of the last quarter of 2012 was "completely at odds" with the national picture.

He said: "The proportion of Exeter businesses reporting investment business is at its highest level for ten years which is remarkable. Exeter continues to be a great place to do business and the inward investment from the likes of John Lewis in the city is testament to this."

GDP – a broad measure for the total economy – would have to contract again this quarter for the UK to be back in recession, but hopes of a rebound are starting to fade after a snow-hit start to 2013 – estimated to have cost the economy more than £500 million a day.

Experts said the economy was suffering "payback" from the rebound in the third quarter, which was fuelled by the Olympics and clawed back activity that was lost during the Queen's Diamond Jubilee holiday.

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15 comments

  • Charlespk  |  January 28 2013, 7:57PM

    You wish it was Justin!!

  • eu_blues  |  January 27 2013, 1:24PM

    "First published in the Western Daily Press on SEPTEMBER 11th. 2001. Dear Editor, It's 12 midday on WEDNESDAY 20th. MARCH 2011 AD. YAWN, YAWN, YAWN & YAWN.... What absolute tosh Charles Henry.

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  • Charlespk  |  January 27 2013, 1:04PM

    Don't worry!. . UKIP will save us!! :))))

    |   1
  • Charlespk  |  January 27 2013, 1:02PM

    First published in the Western Daily Press on SEPTEMBER 11th. 2001. Dear Editor, It's 12 midday on WEDNESDAY 20th. MARCH 2011 AD. The City is deathly quiet. The Air Quality Police haven't reopened the City since The Festival break in December and all vehicles are still banned. There are lights flashing from alarm systems but no-one seems to notice them. Most shops are just full of imitation goods for display purposes since audible alarms were made illegal by Tony Blair in 2005. Most retailers are claiming "Set-Aside" on empty shops or just selling sandwiches to illegals so it doesn't really matter anyway. It's been 9yrs. (I was a bit early. edited 22/11/2008) since the Great Wipe out, the stock market crash that revealed the enormous Index-Linked Pension Pyramid. Fortunately David Blunket our new Prime Minister defied Brussels and closed our borders so at least we were able to 'dig in' and survive, not like the continentals. The Tourists got fed up with Europe anyway. Cities became so overrun with addicts and illegals that everyone works from home now and city living has lost its appeal, most are now like neglected Theme Parks. People have long since abandoned Early Retirement. When their Pensions were devalued they wanted proper jobs to do, fortunately there's plenty of security work for the ex-policemen but even most of them stay at home and try to relearn some of the old domestic skills. The young people have started looking after their own babies again as they have begun to realise that child rearing is the most important and satisfying task that mankind has ever had to master. Global Warming hasn't happened yet in fact it's been another damned cold winter, neither did the Car Boom, recession saw to that and any way it was a pretty stupid proposition to suggest that 60,000,000 people would want 60,000,000 Cars. I mean half the population are old people and babies. Now that we've all got P.T.U.'s (Personal Transport Units) that are so quiet, clean and safe the young people are paying fortunes for 1980's Turbo-Charged Hot Cars. http://tinyurl.com/cqt4yh4 (Open in A new window) The idiots who invested in Public Transport at the turn of the century really got their fingers burnt once there wasn't any money for subsidies. Our P.T.U.'s have now got a range of 350mls. between recharge (a bit optimistic) so who is going to bother with filthy trams and trains infested with druggies. 50% of railway lines have already been turned into Motorways as the Internet now accounts for 80% of all goods purchased. The distributors and carriers found the rail network was totally unworkable. Bill Gates was made bankrupt yesterday. Apple took over the Internet and it is now secure and idiot proof, and they now have the backing of the Big Two Banks. Goodness me! the shop bell! it's 2.30pm. a customer ? . . . The Festival must really be over! . . Ssh!. .We're not allowed to call it Christmas anymore. . . . . Oh no it's not. . . . It Looks like John Turner selling 'The Big Issue' . . . . My word he's showing his age! . . . Last time I saw him he was going to be the new Director General of the BBC and was campaigning to get cannabis made illegal again . . It Can't Be. . . CAN IT ? lol "Hello JT. . How's your luck mate!"

    |   2
  • manicstreet  |  January 27 2013, 12:39PM

    Ladies and gentlemen........... take your partners for the second great depression.

    |   4
  • Doitdreckley  |  January 27 2013, 12:12PM

    Cameron never mentions the 'Big Society' now. Its a total myth. Unless, of course, you refer to the disgraceful need for food banks that have popped up all over the country under this 'Government'. Austerity does not work. Cutting public sector jobs and the benefits of those that need them most just creates more despair and need. The Government does not have a plan: A, B or C.

    |   -2
  • Charlespk  |  January 27 2013, 9:21AM

    I don't think Gordon Brown was nasty, just deluded, as it appears are Labour Party supporters still are. Creating thousands of new public sector jobs has never given real growth. . That's the economics of the EU that has led to the collapse of the Southern European economies. . Profligate governments in the south who thought it was 'Christmas' for ever all paid for by Northern Europe. A large chunk of the single-currency area has a chronic competitiveness problem. . It now believes it 'is', so it's entitled. . Unfortunately the world doesn't work like that, as two World Wars have taught us. . That mentality needs to be embraced again until we get through this. . Cameron's Big Society no less. . We saw it working during the snow and bad weather. http://tinyurl.com/3w98qx7

    |   1
  • AnGof2012  |  January 27 2013, 5:16AM

    The Nasty Party - an utter failure! Westminster governance - a complete shambles! Fit only for handing out P45s to soldiers returning from illegal and fruitless wars which can no longer be afforded.

    |   -1
  • CornishZombie  |  January 26 2013, 6:34PM

    "There are two ways to conquer and enslave a country. One is by the sword. The other is by debt." ― John Adams

    |   1
  • josdave  |  January 26 2013, 5:13PM

    The article is about the economic policy or lack of one by the government and not immigration. coolness-there are 2.5 million unemployed, no growth and public services are close to breaking-says it all and Osborne needs a plan B asplan A clearly is not working.

    |   1

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