Analysis

British Recession Deepens, Pressure on Coalition Mounts

Conservatives cannot keep hiding behind their Liberal Democratic coalition partners.

Britain’s economy contracted for a second quarter in a row in the first three months of this year, technically plunging the United Kingdom in its second recession since the 2007-8 financial crisis.

Pressure will mount on Britain’s coalition government to offer a more convincing plan for economic recovery.

Fire from both sides

Prime Minister David Cameron faces criticism from right-wing lawmakers, who believe his program of austerity hasn’t been tough enough, as well as attacks from the Labour opposition, which rejects it altogether.

The left blames austerity for the lack of economic growth. The right points out that there haven’t actually been cuts, but rather reductions in projected spending increases.

Total public-sector spending, in real terms, was almost 4 percent higher last year than in 2009, Labour’s final full year in power. It is projected to grow further this year.

The government plans to spend £40 billion more than Labour did in 2009, necessitating some £120 billion in borrowing and raising the debt to the equivalent of 62 percent of gross domestic product.

No excuse

Conservatives can blame their Liberal Democratic coalition partners, who are wary of austerity and the sort of market reforms that could produce growth, but, as the conservative newspaper The Telegraph argues, “That excuse is beginning to wear a little thin.”

It cites a survey that suggests a third of British businesses would take on more workers if employment laws were relaxed.

The newspaper also laments the lack of corporate tax reduction:

Such game-changing measures are needed to inject life into a moribund economy. Instead, we have a disappointing and insipid absence of radicalism that is routinely and conveniently blamed on the intransigence of the Liberal Democrats.

David Cameron last year vowed to fight the “enemies of enterprise” and cut regulations, but he hasn’t.

He says that “the real solution” to Britain’s economic woes “is more enterprise, competition and innovation,” yet one out of five Britons is still employed by his government, which accounts for half of the country’s annual economic output.

Divided country

Polls suggest that Cameron’s party wouldn’t win a majority if elections were held today.

Neither would Labour, although it is 10 percentage points ahead.

Neither party has a bold plan for growth. If the prime minister is to regain the confidence of his voters, he should stop pretending that halfhearted measures to stimulate economic recovery are somehow audacious.

Nor can he rely on the Bank of England to revive the nation’s economic prospects with a program of monetary stimulus.

Let him take a stand and demand conservative action.