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NewLab legacy?

23 February 2010 No Comment

Yesterday brought us the news that the UK has just about crawled out of recession – or rather, out of the technical definition of it, although the output of the UK economy in the final quarter of 2009 was the same as it had been in the third quarter of 2005 – so over four years of growth have evaporated.

Growth in the UK usually averages 2.4 per cent annually so we are now over 10 per cent behind where we would have been if the country had achieved no more than average growth over that period.

What is even more concerning is that since 2005 UK government borrowing has doubled.

In yesterday’s Channel 4 News knockabout between Ken Clarke and Peter Mandelson, the NewLab argument was put forward that the government had to keep on spending for now to avoid putting the recovery at risk. Well, it doesn’t appear that all that spending over the past four years has achieved much. Borrowing does have to be repaid, but I suppose that is not a problem once you have been voted out of office.

I can’t help thinking that every recession brings with it a certain amount of pain and borrowing heavily to ameliorate the suffering simply prolongs it. Is a sharp, deep, painful recession that enables us to return to strong growth quickly better than engineering a shallower but longer lasting one? I’d have thought so. Too late now, though.

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