The figures for GDP growth in the first quarter of 2012 were revised today, as many, from Goldman Sachs' Kevin Daly to the Sunday Times' David Smith predicted. What they didn't predict, however, was that the figures would be revised downward. The contraction over the last two quarters now stands at a total of 0.6 per cent.
As our economics editor, David Blanchflower, wrote today:
The economy is tanking and the coalition appears totally lost on what to do about it and they still don't have a growth plan. Saying they have a Plan A doesn't do it. We are now paying the price for them not having or implementing a plan B.
Today is the time to do three things:
- Cut VAT to 17.5 per cent.
- Cut National Insurance on anyone under 25 to zero for two years.
- Announce a program of £50bn of infrastructure spending on shovel ready projects. Local authorities can bid for the money for any project already through the planning process. The Monetary Policy Committee can fund it via Quantitative Easing.
It really is time for the cabinet to start working hard.