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So, the economy grew by 0.2%. Four reactions to those numbers.

By Tim Montgomerie
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The Office of National Statistics has just announced that growth in second quarter was +0.2%. Not as bad as some had feared. Moreover, the ONS said growth would have been 0.7% if it hadn't been for special factors like the Japanese tsunami, extended Royal Wedding bank holiday and extreme weather conditions. [11am: WATCH Osborne's reaction].

Four overall reactions:

One. There's no sense in following Labour's recommendation and going slow on deficit reduction. In the middle of a global debt crisis it's essential that Britain stays on a path to long-term debt reduction. As Mark Field MP states on Comment, Britain's borrowing is way too high and, if anything, Osborne's cuts are too modest:

"Official figures suggest public debt is 60% of GDP, but this excludes the net present value of unfunded public sector pension commitments not to mention the obligations under PFI contracts.  Once aggregated this amounts to £1.35trillion, lifting the total public and quasi debit to £2.46 trillion or 167% of GDP.  Add in the debt held privately by individuals, families and business which is estimated to be £1.2 trillion, and we really are ‘all in it together’; and this is before continued Government borrowing (running at £140 billion this year) further expands the national debt."

C-Home-Revised-GO-MAN Two. The Coalition needs a growth plan. Urgently. The Sun says it well this morning, pinpointing the lack of urgency from the Coalition:

"Mr Osborne talks of cutting tax. But not yet.
He talks of cutting red tape to help business. But can't say when.
He talks of launching enterprise zones. But not till next year.
Meanwhile figures today will show the economy grinding to a halt.
Mr Osborne says we are at the mercy of the world downturn. The Sun doesn't accept that.
There are many immediate steps we could take to promote growth - like confronting the EU over restrictions on business and cutting penal tax rates that destroy enterprise.
Mr Cameron's team talk a good game. But that is all it is. Talk.
Time is running out for this Government to get a grip.
The starting point is to shove the feeble Lib Dems aside and for Conservative ministers to start behaving like Conservatives."

The Sun is right to blame the "feeble Lib Dems" and Osborne must be ready to use the impending Eurozone crisis to get pro-growth emergency measures past them.

Over at ThinkTankCentral we list what an overall growth agenda might look like.

Three. Osborne needs a narrative for the economic future. He needs to give us a fireside chat about the long road ahead. Up until now there's been too much short-term commentary on individual statistics.  He was guilty of this today, welcoming today's figures rather than stressing the hardship people are suffering as part of what the IFS has called the beginning of "Payback Time". The Chancellor needs a doctor's mandate:

"It's incredibly important for George Osborne to look in charge of events - rather than looking like he reacts to them. If a surgeon tells you that once he's treated you, you'll be okay but the convalescence period will be long and sometimes painful you'll be less worried about the aches and pains that follow the procedure. Osborne has never painted a big picture. The Tory press machine jumps on any data it can find as proof that the Coalition's strategy is working in one sign that there's too much tactics, too little strategy at play."

OSBORNE & CAMERON Four. Advisers talking of DC/GO splits need to pipe down. The Telegraph today follows up Iain Martin's Saturday column and the idea of tensions between Osborne and Cameron. It's true that some advisers are being naughty. There's no truth that there is any split between the two principals. The Osborne/Cameron relationship remains rock solid. Advisers should stay quiet.


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