By Peter Hoskin
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Flat. That's how George Osborne is probably feeling this morning, and it also happens to be how the Office for National Statistics describes our economy. They have have just released their preminlinary estimate for GDP growth in the fourth quarter of 2012, and it ain't pretty. The economy shrank by 0.3 per cent in the final three months of last year, a hangover after last summer's Olympics – and that means that, in their words, "GDP is estimated to have been flat between 2011 and 2012." Flat, flat, flat.
Of course, this raises the spectre of a triple-dip recession: officially, it takes two consecutive quarters of economic contraction to make a recession, so we'll have to wait for the figures for the first quarter of 2013 to be sure. But before we all burst with anticipation, some caveats. First, these figures are subject to revision – it could be that they're revised upwards in future, or downwards. Second, as I tend to point out, quarterly GDP numbers aren't the be-all and end-all. We oughtn't forget that some parts of the country have been stuck in recession for decades.
But today's numbers are still significant, not least because they threaten to cast Mr Osborne's plans into further disarray. Deficit reduction relies, of course, on tax receipts, and they, in turn, rely on growth. If the Office for Budget Responsibility's growth forecasts for 2013 — 0.3 per cent in the first quarter, 1.2 per cent over the year — start to look as optimistic as some of their previous efforts, then what of its forecasts for Government borrowing? The Chancellor can ill afford any slippage now, particularly given how precarious the situation already is.
And then there is, as always, the politics. Ed Balls will derive mischievous pleasure from all this, whereas others will lament. Already, this morning, the debate seems to have turned back to the fundamentals of the Chacellor's approach. Nick Clegg has told the House Magazine that the Coalition's initial cuts to capital spending may have been too hasty; while Boris is urging the Tory leadership to "junk the rhetoric of austerity". After the euphoria of the Europe speech, the dysphoria has returned – and how.