The UK's Double-Dip

A blog about business and economics.
July 25 2012 8:35 AM

UK Economy Now Smaller Than When The Coalition Took Office

146312897
A man stands beside the railings with a painting depicting British Prime Minister David Cameron waiting for Cameron's arrival to give evidence at the Leveson Inquiry into media ethics at the High Court in London on June 14, 2012

Photo by ADRIAN DENNIS/AFP/GettyImages

If you want to see what a really weak recovery lools like, cast your eyes across the Atlantic to the United Kingdom which is mired in a double dip recession with output having shrunk 0.7 percent in the second quarter. Sarah O’Connor and Hannah Kuchler for the FT observe that this is not only the third straight quarter of shrinkage, it means British GDP is lower than it was when the Conservative/Liberal coalition government took office.

1343219667716

This is by no means exclusively the fault of the government, whose geographical position leaves it more vulnerable than the US is to the problems of the eurozone.

Advertisement

But you're left with the fact that they chose to undertake an ideologically driven effort to effect a structural shift of the British economy out of producing public services and into private market production at the very same time that the UK's heavily financialized economy was forced to undertake other large shifts. They combined that with demand policies from the Bank of England that were totally inadequate given what they were trying to do on the fiscal side. And on top of that, they've raised a bunch of taxes for no reason at all that I can tell. It's a total mess.

1343219691219

All throughout they've been eerily obsessed with the idea of keeping the UK's borrowing costs low. And on that front, mission accomplished. UK ten year bond yields are freakishly low. But even though team austerity has achieved what they wanted, they don't seem to understand how this works. A technologically advanced democracy that borrows in its own currency achieves super-low borrowing costs by plunging itself in a Japan-like pit of economic despair. So mission accomplished.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Talking White

Black people’s disdain for “proper English” and academic achievement is a myth.

Alabama’s Insane New Abortion Law Gives Fetuses Lawyers and Puts Teenage Girls on Trial

Tattoo Parlors Have Become a Great Investment

A Jaw-Dropping Political Ad Aimed at Young Women, Apparently

The XX Factor
Oct. 1 2014 4:05 PM Today in GOP Outreach to Women: You Broads Like Wedding Dresses, Right?

Big Problems With the Secret Service Were Reported Last Year. Nobody Cared.

Crime

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

Hong Kong’s Protesters Are Ridiculously Polite. That’s What Scares Beijing So Much.

This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century

Moneybox
Oct. 1 2014 8:34 AM This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century To undertake a massively ambitious energy project, you don’t need the government anymore.
  News & Politics
Politics
Oct. 2 2014 11:01 AM It Wasn’t a Secret A 2013 inspector general report detailed all of the Secret Service’s problems. Nobody cared.
  Business
Moneybox
Oct. 2 2014 12:58 PM Why Can’t States Do More to Protect Patients From Surprise Medical Bills? It’s complicated.
  Life
Lexicon Valley
Oct. 2 2014 1:05 PM What's Wrong With "America's Ugliest Accent"
  Double X
The XX Factor
Oct. 2 2014 12:37 PM St. Louis Study Confirms That IUDs Are the Key to Lowering Teen Pregnancy Rates
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
  Arts
Brow Beat
Oct. 2 2014 1:29 PM Want to Know What Makes David Fincher Great? Focus on What He Doesn’t Do.
  Technology
Future Tense
Oct. 2 2014 1:22 PM If Someone Secretly Controlled What You Say, Would You Notice? What cyranoid experiments reveal about how people act.  
  Health & Science
Science
Oct. 2 2014 12:53 PM The Panic Virus How public health officials are keeping Americans calm about the Ebola threat.
  Sports
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?