Dark cloud is hovering over PM's path to Celestial City

UK Political Editor

Thursday 26 April 2012

CONFIDENCE is everything and the news that Britain has slipped back into recession will, sadly for us all, only make the prize of recovery even more elusive.

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MICHAEL SETTLE UK POLITICAL EDITOR

It will mean businesses, supposedly hoarding cash, will still be reluctant to unleash their funds and start hiring people, and it will mean consumers will be unnerved by the inclement economic weather and decide not to venture out and spend their earnings.

All of which will maintain the sense of gloom and mean achieving growth will be longer and harder than anyone imagined even a few months ago. As things stand, the growth forecast for this year from the Office for Budget Responsibility is already a meagre 0.8%.The latest gross domestic product figures, which show the economy shrank another 0.2% in the first quarter of 2012, coming on the back of a decline of 0.3% in the last quarter of 2011 mean the UK is suffering its first double-dip recession for several decades.Indeed, the rollercoaster recovery has been the weakest following any recession for more than a century. Yesterday, the Prime Minister, with a great deal of understatement, said the figures were "very disappointing" and had to face the full Commons hairdryer from the Labour benches as Opposition MP after Opposition MP stood up to berate the Coalition's failure.David Cameron responded by insisting the recovery would be a difficult, painstaking process but one he was determined to complete; he insisted that "we will stick to our plans".No 10 was also keen to stress how the eurozone was having a numbing effect on the UK's recovery and pointed out how Italy, Holland, Ireland, the Czech Republic and Slovenia, among others, were also in recession.As Labour Party leader Ed Miliband lambasted the Prime Minister, declaring how this was a recession "made in Downing Street", the Trades Union Congress insisted austerity was simply not working and a change of course was needed.Indeed, there is a growing mood across the troubled eurozone that all the cuts being foistered on unhappy populations from Athens to Paris are simply failing.If the Socialist Francois Hollande wins the French presidency next month, then the economic unity brokered by his Conservative rival Nicolas Sarkozy might begin to break down and plunge the eurozone into even greater uncertainty.At a stormy Prime Minister's Question Time, Mr Miliband used one of the sticks handed to him by Tory backbencher Nadine Dorries to beat Mr Cameron and his Chancellor, echoing her sentiment that they were simply "two arrogant posh boys" who simply did not get it. Coming on the back of the "omnishambles" of the Budget, which questioned the Prime Minister's competence, and the controversy over the Murdoch emails, which questioned his integrity, the dark cloud of recession means this is fast becoming the slough of despond for the Cameron premiership.What he and George Osborne will be hoping for is that, given the Office for National Statistics figures are based on only 40% of available data – there is a sense among some pundits that they paint an unduly pessimistic picture – the two further GDP revisions in May and June will see a revision upwards; the path to the Celestial City might finally open up. And yet Sir Mervyn King, the Governor of the Bank of England, has done his best to prick the bubble of summertime optimism by already warning that the economy might "zig-zag" in coming months with the long Diamond Jubilee weekend and the Olympics set to distort the figures for the second and third quarters.Those quiet summer holidays might not come quickly enough for our embattled Prime Minister and his beleaguered neighbour in Downing Street.

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Dark cloud is hovering over PM's path to Celestial City

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