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IEA - Taxed and regulated to a standstill
Julian Jessop, Economics Fellow at the Institute of Economic Affairs responded to the latest GDP figures
“The latest GDP data show that the UK economy is being taxed and regulated to a standstill. The “steady as she goes” Spring Statement now looks even more like a missed opportunity to change course.
“The monthly figures are not very robust and are often revised, but the recent trend is worrying. After growth of 0.2% in November, headline GDP increased by just 0.1% in December and then flatlined in January. The three-month on three-month comparison looks better and actually picked up, from 0.1% in December to 0.2% in January. However, this rate of growth is still feeble. Adjusting for increase in the population, quarterly growth in GDP per head probably remained close to zero.
“The weakest sector in the three months to January was construction, where output fell by 2.0%. This is a damning verdict on the government’s flagship pledges in several key areas, notably housebuilding and infrastructure spending.
“What’s more, these figures were recorded before the shock of the Iran war. The weakness of economic activity will at least make it easier for the Bank of England to look past the temporary impact of the jump in energy prices on inflation. But the spectre of “stagflation” has returned and this will dampen confidence further.”
‘An economy doesn’t grow because ministers will it to’
Lord Frost, Director General of the Institute of Economic Affairs, said:
“These figures are the predictable consequence of Government action that has piled costs onto businesses through the National Insurance rise and a raft of new employment regulations, while offering nothing credible in return by way of supply-side reform. Our continued stagnation tells you something important: an economy does not grow because ministers will it to — it grows when businesses have the confidence and capacity to invest. The Chancellor cannot keep blaming global headwinds when the damage is largely self-inflicted. If this Government is serious about growth, it needs to stop treating it as a slogan and start making the policy choices that actually deliver it.”
