Amber Rudd is Member of Parliament for Hastings and Rye. Follow Amber on Twitter.
Last month I received a number of negative comments when I suggested on ConservativeHome that, despite the disappointing Q2 2012 GDP figure, there were some reasons to be optimistic about the outlook of the UK economy. I pointed to encouraging employment figures, which have risen by 201,000 in Q2 2012 with the number of people working full time increasing by 130,000. As predicted by many economists, these figures suggest that the -0.7% Q2 GDP figure published in July was overstating the weakness of the economy, and today’s revision to -0.5% proves this to be the case. If you discount the extra bank holiday, this means that the UK economy roughly experienced zero growth during Q2 2012.
I will not pretend that the road to economic recovery will be easy. Although the UK’s budget deficit has fallen by 25% since May 2010, it is still a major challenge for the Government. Furthermore, the uncertainty of the Eurozone crisis is a continuous drag on the UK economy. A long term solution to the European sovereign debt and banking crises is still lacking, affecting confidence across Europe. Even Germany, the Eurozone’s strongest economy, is now experiencing a slowdown in economic growth. This just goes to show the challenge that the UK and other European economies will face over the coming years.
Let me be clear – I am by no means claiming that we should be celebrating this revision. It does, however, suggest that the scaremongering about the state of the UK economy should be treated with caution. Unemployment is at an 11 month low, employment is up substantially, inflation has fallen dramatically over the past few months and retail sales were up in July. These are all reasons to be positive. Let’s now get on with the essential task of freeing up businesses and encouraging entrepreneurs, to build real growth back into the economy.