Britain has suffered a double dip recession according to the latest GDP data for the first quarter of 2012. The economy contracted in this quarter 0.2% after having contracted 0.3 % in the fourth quarter of 2011. This is no surprise considering the draconian cuts in government expenditure that Chancellor George Osborne introduced in his budget and that was passed in Parliament with the support of the governing coalition of Conservatives and Liberal-Democrats. At the time these cuts were introduced a number of economists including myself pointed out that these austerity cuts were the wrong medicine for an economy struggling to recover from the crash and the deep recession that followed. And we were right to do so as the current data show. The chart below shows changes in the GDP, employment and weekly hours worked from Q1 2008 to Q1 2012 courtesy of the British Office of National Statistics.
Despite this clear evidence that the solution to deficits is to promote economic growth through stimulative spending which helps restore confidence to the private sector the Chancellor continues to argue nonsense about how to solve the ”debt crisis” through austerity.