The U.K. got some bad news today: The economy unexpectedly shrunk in Q1.Analysts had expected growth of 0.1 per cent, but instead the economy contracted by 0.2 per cent, representing the second straight quarter of contraction, and thus technically meaning the U.K. is in a recession.
The fact of the matter is that the economy has been dismal since Cameron took power.
Earlier Reuters’ Scotty Barber posted this chart comparing the U.S., U.K., and Eurozone growth.
The U.K. is worse than the Eurozone since the crisis!
Photo: Scotty Barber, Reuters
Now the Eurozone has a good “excuse” for such dismal economic performance.
The Euro is badly flawed, and that’s created all kinds of sovereign debt problems not befitting developed economies. That’s turned its banking system into shambles, further exacerbating the problem.
The U.K. doesn’t have this problem.
It controls its currency, and the market is not at all worried about its debt position.
And yet! And yet David Cameron has — for no reason — pushed the same austere ideas that are leading to ruin in Greece and Spain.
That’s bad, but whatever, leaders make bad moves, cutting spending at the wrong time. It happens.
But here’s where David Cameron sounds like a moron.
During Prime Ministers’ Questions today, this is what he said, according to Bloomberg:
CAMERON SAYS LOW RATES DEMONSTRATE BRITAIN HAS CREDIBILITY
OMG! Your economy is going into a double dip recession! That’s why your government borrowing rates are plunging. It’s got nothing to do with “credibility.” It’s the fact that when your economy is going down the tubes, there’s nothing appealing to invest in, and so they just park their cash in risk-free government debt.
Low rates in the U.S., U.K., Germany, and Japan, are the surest signals of long-term decline. What on earth are you bragging about?
This is the contagion channel that nobody thinks about. Everyone talks about how the crisis in the Eurozone could topple world banks, but here’s an example of how the Eurozone crisis has rotted the minds of leaders (and it’s not just in the U.K., but also in the U.S. where ‘Greece’ is used as a warning of what happens if we don’t use austerity).