As I write this, the Office of National Statistics has just announced that the UK’s GDP shrank by 0.2% in the first quarter of this year. As it also shrank in the final quarter of 2011, the UK has now officially returned to recession. The looming double-dip has finally arrived.
It could not have come at a worse time.
Yesterday, the ongoing phone hacking scandal took another turn, as internal News Corp emails suggested that Jeremy Hunt, the Culture Secretary, who was in charge of deciding whether the company could go ahead with their bid for BSkyB, was rather more partial to the company’s position than a judge should be. Indeed, it is alleged that he passed over sensitive and confidential information to senior members at News Corp in order to help them with their bid. His reputation as the ‘nice guy’ in the Cabinet is now in tatters, as is likelihood of him becoming a future leader of the Conservatives – an occasional suggestion. He will speak to the Commons, and has pleaded with the Leveson Inquiry – which currently has no less than Rupert Murdoch in the chair – to give him an opportunity to salvage his career there, but the damage has been done.
(While writing this, Mr Hunt’s special advisor, Adam Smith, has just resigned for the role he played in the seemingly cosy relationship with News Corp. Perhaps this is a sign of things to come.)
This comes on the back of an already terrible month. The budget received a stinging response, with persistent talk of it raising a “granny tax” while cutting taxes for the rich. The good bits, such as progressively raising the minimum threshold, were leaked so far in advance that people were bored of them by the time they were announced.
Then there was the Abu Qatada furore, and Theresa May’s botched attempt to deport him, as well as the minor petrol crisis, with people queuing at stations on the enlightened advice of Francis Maude to fill up their tanks. There was also the Peter Cruddas affair, where the former co-Treasurer of the Conservative Party was caught telling undercover journalists that a large sum of money could buy them access to the government’s upper echelons, and allow them to express their opinions to the policy-making team.
Even Nadine Dorries, a vocal Conservative backbencher, put the knife in by describing David Cameron and his Chancellor, George Osborne, as:
Two posh boys who don’t know the price of milk … they are two arrogant posh boys who show no remorse, no contrition, and no passion to want to understand the lives of others – and that is their real crime.
Overall then, it’s been a very bad few weeks for the government, and the Conservative Party in particular. This truth was laid bare by the polling data that was released earlier this week, before both the Hunt controversy, and the news that the UK is now in recession. A Guardian/ICM poll on April 24th showed a drop for the Conservatives from 39% six months ago to 33% today. Labour meanwhile has jumped to 41% from 36% at the same time. The Tories appeared to have a steady 3% lead… up until the budget that was, when things seem to have gone into freefall. The Lib Dems are on 15% according to this poll, although, as I mentioned in my last post, another recent poll for The Sun, put the Lib Dems on 8%, one percentage point behind UKIP. In the Sun poll, Labour was placed on 43% with the Conservatives on 32% – an 11-point lead.
The news that the UK is now back in recession, therefore, could hardly be less welcome for Mr Cameron or Mr Osborne. This is indeed the first time since the oil shock of the early 1970s and subsequent stagflation that the UK’s recovery from a slump has been so weak that it fell into a double-dip recession. The pound has fallen on the announcement, and it seems likely that the UK will soon be stripped of its coveted AAA rating – the protection of which Mr Osborne has staked his credibility. Mr Osborne is, for now, putting on his usual, now clichéd stance of needing to “stay the course”, and there is “no Plan B”. But his reputation will sink faster than the British economy.
Which brings me to the real truth of the matter: the government is in crisis. It stems largely from incompetence, but it is to no-one’s benefit.