Triple Dip Recession

The UK is looking increasingly likely to enter into a triple dip recession, the first of its kind in British history. Britain returned to a shrinking economy in the fourth quarter of 2012, another quarter of this will throw Britain back into recession. Unforunately for us a shrinking of 1.5% in the manufacturing sector was the primary reason for Britain's economy shrinking by 1.8% overall. This means that in 2012 the British economy did not grow at all. The increasingly bleak economic outlook is causing some senior Conservatives to break ranks, Boris Johnson has told the government to "junk talk of austerity" and try to stimulate the economy. Yet the government is refusing to budge from its position and refuses to change direction. The government is convinced that they are on the right path, despite all indicators to the contrary. David Cameron and George Osborne are stuck in the false idea that Britain's deficit is the top priority and that austerity must therefore be pursued. Unfortunately this has a negative affect on the economy, combine that with banks and consumers tightening their spending and the whole economy is spiralling downwards. 

Yet the argument that I find most bizarre is the one surrounding credibility. The government claims that if they pursue economic stimulus that they will lose all credibility and government bonds will rise. This is a bizarre argument considering how little economic credibility they have left considering their policies are driving Britain's economy into the ground. All we need to do to prove them wrong is look across the Atlantic to the USA, America pursued economic stimulus under Barack Obama and America's economy is above its pre-crisis level. Not only that, their bond yields are lower than ours and America's budget deficit is shrinking, whereas ours is growing!

The fact is the Labour Party handed the current coalition a growing economy thanks to stimulus, now the government's austerity has forced us into a double (maybe triple) dip recession. Great.