Mixed views on pre-election economy figures

8 Apr 10
Figures hailed by the government as ‘vindicating’ its efforts to tackle the recession should be treated with caution, a leading economist has told Public Finance.
By David Williams

8 April 2010

Figures hailed by the government as ‘vindicating’ its efforts to tackle the recession should be treated with caution, a leading economist has told Public Finance.

The performance of the economy will be a key election issue, with the publication of  official statistics on April 23 likely to be a crucial watershed point in the campaign.

Data published by the Organisation for Economic Co-operation and Development on April 7 predicted that the UK economy would outperform all its G7 peers except Canada in the second quarter of 2010.

The OECD forecasted a rate of growth that would add up to 3.1% of gross domestic product if sustained across an entire year. A similar calculation for the first quarter gave a figure of 2%.

But Ray Barrell, director of macroeconomic research and forecasting at the National Institute for Economic and Social Research, doubted whether the findings were plausible.

‘Growth rates of that size don’t look like they’re there,’ he said. He added that sluggish growth in January and February meant that only a ‘remarkably strong’ March could produce the overall rate of 2%.

He said the data so far did not show that the economy was ‘growing that robustly’.

Nevertheless, Chancellor Alistair Darling said it showed that the government’s fiscal stimulus had ‘set the country on the course for faster growth in the coming months – but only if we don’t cut support too soon’.

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