Olympics Economics

Get out the bunting, have a party, spend like you’ve never spent before. Yes, the economy is in recovery. Stop worrying. It’s all over. We’ve been saved. Not.

Express Front PageI had to laugh on the way to work this morning when I saw the headline in the Daily Express. “Britain Roars Back to Life”. I’m sure you’ll all agree that there’s no roaring, more of a whimper. The further away you get from the Olympic Park, the quieter and quieter it gets. Maybe a more fitting headline would have been “Britain Stumbles on Olympic Crutches”?

It’s interesting (I use that word loosely) to hear the Government saying how things are back on track and how we should all feel a little more positive after the latest growth figures. After all, a 1% rise is impressive. But, strip out the predicted 0.7% growth caused by the Olympics and then take into account the previous quarter’s 0.2% drag from the additional Bank Holiday, and what you’re left with is 0.1% growth. Nothing really. It’s also interesting to note that even some of the right wing press has noticed the flaw to the Government’s message, with the Telegraph leading with “A 1% jump in GDP is excellent, but don’t expect the same next quarter”.

Ed BallsEd Balls MP, in my opinion, played a clever game yesterday. He commented that the latest figures were a welcome piece of news, but also added that the Olympics are “no substitute for a plan to secure and sustain the strong recovery that Britain desperately needs”. The reason I think this is a clever game from the Shadow Chancellor is that, if he’d come straight out and not even recognised the slight growth, he’d have been lambasted for it. He had to recognise the growth, but ultimately, his message was the right one.

The Government will no doubt make sweeping statements about how the economy is being supported by the creation of unemployment imageprivate sector employment and that this will continue to grow. What they don’t tell you is that a lot of this growth is being supported by the Government’s work experience programmes. Indeed those who take part in the Government’s scheme are classed as being employed, even if they’re completing the work unpaid. The Government is getting the best of both worlds in its view. Free labour and massaging the figures. Some estimates suggest that 158000 people are not on the unemployment figures that should be.

The Government should change course, we all know that. They probably know that. But, they’re too stuck in their ways now to see beyond the end of their millionaire noses. Austerity isn’t working, clear and simple. The number ofAusterity isnt workingvoices shouting that is growing by the day. It’ll be interesting to see how the Government reacts to growth figures in the next quarter once we’ve lost the Olympic boost. But, over the next few weeks, expect lots of interviews telling us how the Government have saved the day. Of course, they could always keep bidding for international sporting events in the hope that we’ll never really notice what’s going on in the background.