The claim 
“There’s no doubt that growth in Britain, jobs in Britain, have been hit by what’s going on in the eurozone.”
George Osborne, November 11 2011
Cathy Newman checks it out
If you’ve got a hard hat hanging around, it’s time to put it on. Because it looks like this week, every day will bring yet more economic doom and gloom.
Tomorrow, October’s inflation figures are expected to be high enough to force the Bank of England governor Sir Mervyn King to write his eighth letter of explanation to the chancellor.
On Wednesday, the Bank of England slashes its growth forecast and unemployment figures show a million under-25-year-olds out of work.
On Thursday, we’ll find out what effect this is all having on the high street with the release of October’s retail sales figures. So you could forgive George Osborne for cowering in the Treasury waiting for the next bombshell to fall.
Except the chancellor’s been at pains to connect disappointing jobs and growth here with the drama in Europe. Will that wash?
The analysis
Growth
Now news of the eurozone’s weaknesses – and the frailty of the Greek economy in particular – has been bubbling away for a while, but fears that the sovereign debt crisis could spread to the larger economies of Italy and Spain only began to circulate widely in the summer months.
So there would only be evidence of an immediate knock-on effect on UK growth if GDP slumped suddenly in the third quarter of this year.
In fact, the figures show that the UK economy has barely been out of recession over the last year and there is no clear evidence of a recent change in trend.
The figures for the last four quarters were -0.5 per cent, 0.5 per cent, 0.1 per cent and 0.5 per cent – almost a flatline.
By contrast, France and Germany’s growth figures were higher than the UK in the second half of last year and the first quarter of this year and have slumped more recently – a more likely sign of the debt crisis effect.
Jobs
Unemployment began to rise well before the eurozone crisis too. Government statistics show a rise from 2.45 million people in the three months from March to May to 2.57 million from June to August.
That’s a quarter-on-quarter rise of 4.7 per cent and a similar rise year-on-year.
We’ll have to wait until the next set of figures are released later this year to measure the full effects of the events of the last three months in Europe, but a recent survey from the Chartered Institute of Personnel and Development expects UK unemployment to rise again from October to December.
Trade
As the Institute for Public Policy Research have pointed out, export volumes to other EU countries hit a record level in August, with levels up 5 per cent on a year earlier.
During the same period, export growth to the rest of the world grew by less, precisely the opposite to what you would expect if the eurozone crisis were hitting UK firms who sell to the continent.
We should point out that while the IPPR dloesn’t agree with Mr Osborne that the debt crisis is strangling the recovery, the think tank doesn’t follow Labour’s line that the chancellor’s austerity measures either, preferring to focus on the continuing effects of high oil and food prices.
Cathy Newman’s verdict
George Osborne’s problem is that the UK economy started to flatline well before the eurozone went into meltdown in the summer months. And unemployment also began to rise well before the likes of Italy hit trouble.
So the chancellor can’t blame our current woes on what’s going on across the Channel. However, we’ll certainly be feeling the effects of the eurozone debacle in the coming months. Then the blame game will really begin in earnest.
