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Thursday, April 25, 2013 

Osborne as sadist.

It's a sign of just how grim the economic news has been over the past year that the fact we've narrowly missed out on plunging into an unprecedented triple-dip recession is being regarded as something approaching a minor success.  All it confirms in reality is that the economy remains broadly flat: taking into account the 0.3% decline in the last quarter of 2012, which followed on from the 1% rise in the third quarter that can be almost wholly put down to the Olympics, the economy has barely grown since the slight recovery of 2010/11.  The figures could also yet be revised down, as the full data from March and the impact of the snow has yet to come in.

If anything, it's the worst of all possible worlds.  George Osborne has rightly been under severe pressure over the past week, with a further credit rating downgrade from Fitch, the IMF finally getting off the fence, saying the chancellor's austerity programme should be loosened, and the borrowing figures that showed a minute in real terms drop of £300m.  He's used the 0.3% to claim, against all the evidence, that it's "an encouraging sign the economy is healing".  It could well be a sign that this year will see an extremely modest return to growth, but even if it is it's not going to do almost anything to reduce the deficit, nor is it proof it's his policies that are responsible.

Indeed, for all the coalition's talk of rebalancing the economy and Osborne's laughable march of the mallards makers, manufacturing remains in the doldrums (some of which is undoubtedly down to the ongoing woes in the Eurozone), while construction activity continues to plunge. The figures also make it more difficult for the incoming governor of the Bank of England Mark Carney to convince the other members of the monetary policy committee that further intervention beyond quantitative easing is needed to boost growth, which was exactly what Osborne was said to be relying on.

Of course, if Osborne were to suddenly decide that continuing with his plans as they stand is more damaging in both the long and short term than bringing the deficit down at a slower pace with the risks that entails, he would still be able to borrow at close to record lows, in spite of the credit downgrades he once scaremongered about and said his policies would prevent. Despite Plan A not really existing any longer though, such has been the success of austerity so far, we simply have to stick to whatever it is we're doing now. We've gone past the point at which this was a mere fetish to it bordering on full blown S&M, where Osborne's the sadist and we, like it or not, are the masochists. It's hurting but it isn't working doesn't even begin to cover it.

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