As UK politicians celebrate the fact that they supposedly sidestepped a financial crisis, they are pledging a continued plan of austerity even as Q4 GDP data released this morning shows that the economy is already slipping. GDP fell by -0.5% versus expectations for 0.4% growth. Chancellor George Osborne was quick to blame the disappointing report on the weather and pledged to move forward with his austerity plan despite the havoc similar plans are creating in the surrounding countries (via Reuters):
“These are obviously disappointing numbers, but the ONS has made it very clear that the fall in GDP was driven by the terrible weather in December,” Osborne said in a statement.
“We have had the coldest weather since records began in 1910 and this has clearly had a much bigger impact on the economy than anyone expected. It’s notable that sectors of the economy that are less affected by the poor weather, such as manufacturing, continue to perform strongly, helping to rebalance our economy,” he added.
“There is no question of changing a fiscal plan that has established international credibility on the back of one very cold month. That would plunge Britain back into a financial crisis. We will not be blown off course by bad weather.”
Update: BNP analysts looks into their crystal ball with what is likely a pretty good prediction:
“As the year progresses we expect the implementation of the government’s austerity measures to bite, reinforcing the headwinds to growth. … We expect pedestrian consumer spending growth at best, which given it accounts for around 2/3 of GDP by expenditure, will set the tone for a sluggish overall growth rate. … Overall, a terrible headline reading, probably exacerbated by the weather.”