From the TUC

Is the economy healing?

09 Oct 2012, by Guest in Economics

It seems that the Chancellor now has two favourite soundbites – ‘we’ve reduced the deficit by a quarter’ and ‘the economy is healing’. Both are quite effective lines, and I rather imagine they’ve been heavily focus-grouped, road-tested and are highly calibrated.

The only real problem with these these lines is that neither is actually true.

Nicola set out in great detail yesterday the myriad of problems with the ‘we’ve reduced the deficit by a quarter’ line.

And today the IMF effectively has weighted in on the  idea that ‘the economy is healing’.

If the economy were indeed in healing mode then one might reasonably expect the IMF to start upgrading it’s forecasts for growth in 2012 and 2013 – or at the very least to stop cutting them.

Instead today the Fund has said it now expects the UK economy to contract by 0.4% this year and to grow by just 1.1% in 2013.

The graph below plots the IMF forecasts for 2012 and 2013 growth over the past year (taking in the World Economic Outlook forecasts of today, July 2012, April 2012 and September 2011).

Just over a year ago the IMF expected the economy to grow by 1.6% this year and by 2.7% next. 

The picture isn’t one of an economy that is healing, it’s of one that is very much still weakening.

(As a footnote the most important thing in today’s IMF report was it effectively revising its views on the impact of fiscal consolidation – Jonathan Portes has covered this in detail).

2 Responses to Is the economy healing?

  1. Frances Coppola
    Oct 9th 2012, 2:49 pm

    Paul Fisher said markets were “scarring over”. I think that’s quite a good description of the economy, too. Not healing, just becoming numb – less responsive to monetary stimulus.

  2. James Oliver
    Oct 9th 2012, 8:49 pm

    According to ATOS and the DWP disabled people are healing very quickly. 73 disabled people are dying in the UK each week according to figures released by the DWP after a FOI request. At this rate all disabled people – who as we know caused the economic corruption erm ‘troubles’ that so hamper our great nation – will be dead soon and the government will save loads-a-money for themselves and their banker friends.

    Disabled people who were lauded at the Paralympics and found they had services unknown before – like ramps at train stations which are now being withdrawn of course – who add diversity and talent to our nation yet are abused and NOBODY says anything. I never see anything on this blog about disabled people. Is there a reason for that?