So we are in recession again. The politics of this matters much more than the economics. Even if UK GDP were a few tenths of a percentage point higher, just enough to keep recession at bay, the economy would still be flatlining.
Has George Osborne got it wrong? Should we be borrowing even more than we are doing already to try and pump things up a bit? For me the most telling statistic to emerge in the last few days has been the Budget Deficit for 2012. At £126bn it is only £10bn lower than 2011. If Osborne's critics had their way we would be reducing the Deficit a bit slower, so let's assume that if he had reduced the deficit by only £5bn they would have been a bit happier. What would the result of the injection of that extra £5bn into the economy have been? Probably peanuts. It would have amounted to about %0.3 of GDP.
An injection of demand big enough to make a difference would have made the Deficit grow instead of shrinking modestly. In a climate where the gilt markets - who do not have to lend to us - are shying at government bonds like nervous thoroughbreds at a briar hedge, increasing the Deficit on a promise of cutting it one day would be a very dangerous move. There probably isn't much Osborne can do to make things better other than hold his nerve - we are not going to see any significant growth until the Eurozone sorts itself out. I'm not holding my breath on this one.
Of course all the half-baked half-wits who think that there's a magic button Osborne could press to make everything right will be all over the media, broadcast and print, for 48 hours, adding to the impression of a government in disarray. There is something David Cameron could do about this immediately which would make him look competent, decisive and straight - fire Jeremy Hunt.
After Vince Cable was forced to step aside after boasting to some fruity young tape-recorder wielding young women that he was out to trash Rupert Murdoch, his replacement seems to have been out to rectify Cable's perceived bias on the BSkyB issue. Cable was fired because he was partisan; how on earth could Hunt imagine his own manifest enthusiasm for the Murdoch bid was OK? The Torygraph put it exceptionally well this morning: "No 10 said that Mr Cameron believed Mr Cable's anti-Murdoch comments were 'totally unacceptable and inappropriate'. It seems that Mr Hunt's pro-Murdoch bias was both acceptable and appropriate". Well yes.
It's a good day to bury bad news about the economy. Hunt must go. And if he doesn't, what does that tell us about the Government? It's normally well on into an administration's life when failure to spot the flippin' obvious becomes endemic. Two years in is way too soon. If I were one of Cameron's friends I'd be worried.
PS A few days after writing this, it appears that Cameron has decided headlines about Jeremy Hunt might be preferable to headlines about the economy. Hunt lives because we are in recession.
