Number 10 Press Briefing - Morning From 25 January 2011
From the Prime Minister's spokesperson on: GDP figures, Sky and misc.
GDP Figures
Asked if the Prime Minister was confident there wouldn’t be a double dip recession, the PMS said that it was worth noting what the ONS itself had said about the impact of the cold weather on this quarter. It was also worth noting the negative contribution from construction, which was historically a very volatile part of GDP.
The PMS added that when looking at the last three recessions, there had been quarters of negative or flat growth. So this was in line with experience of previous recessions and added that the recession we had just experienced had been particularly severe. The PMS said we had always pointed out that the period coming out of recession was likely to be choppy.
Asked if the Prime Minister was surprised at how bad the figures were, the PMS said that these were clearly disappointing figures and they had surprised the forecasters.
On whether he had a view on what the growth figures would be if the bad weather element was stripped out, the PMS replied that the ONS had said that the impact of the weather in December was to reduce GDP by 0.5%, of which 0.1% was construction and 0.4% was services. In the absence of the cold weather we would have recorded ‘flattish’ growth in the words of the ONS.
Put that most of the ‘live’ data in the forecasts would have come in the first half of the quarter, when bad weather was not such a problem, the PMS advised people to speak to the ONS on how the figures were put together.
Asked if there had been any concern during Cabinet over an uneven recovery in different parts of the country, the PMS said these figures showed that services had been weak in the last quarter, which would be consistent with what had happened to the weather.
Construction was notoriously volatile, but we had also seen continued growth in manufacturing, which had now been growing for six successive quarters.
Asked how confident the Prime Minister could be that there wouldn’t be a second quarter of negative growth, the PMS replied that forecasts for economic growth were now carried out by the OBR. Asked when the next forecast was due, the PMS said at the time of the Budget.
When asked if the Government would accept that a return to recession was a possibility, the PMS replied that if people looked at previous recessions, this choppy period as the economy came out of recession was what we had seen in the past. The PMS said that while the figures were disappointing, they certainly weren’t out of line with previous experience.
The PMS added that it had been an incredibly severe recession, which had a significant impact on the economy.
Asked if the Prime Minister was confident that this was just a ‘one quarter blip’, the PMS replied that previous experience showed that this could happen. The economy was undoubtedly affected by the recession and it would take time for it to recover.
The PMS said that the important thing was that the approach we had was the right one. If we were to see sustainable growth and a rebalancing of the economy, we must stick to our course and deal with the deficit effectively.
Asked what evidence there was from today’s figures that the Government was on the right course, the PMS replied that people did not have to look too far to find evidence of what could happen if a large structural deficit was not dealt with.
Asked if it was a concern that we had not yet seen the impact of the rise in VAT or public sector spending cuts and was the Prime Minister still confident that we were ‘out of the economic danger zone’ the PMS said that the Prime Minister had been commenting on speculation in the markets about the UK’s credit rating.
The PMS added that the IMF had put out a report this morning saying that one of the key downsides to growth was ‘slow and insufficient progress in developing medium term fiscal consolidation plans in large economies.’ So the IMF were very clear that if countries did not have a credible plan to deal with the deficit, it would be a very real problem for their growth prospects.
Put that Richard Lambert had said that the Government had no plan for growth, the PMS said that the Government was developing proposals to make sure we did see sustainable economic growth. Part of that plan was to reduce the deficit.
The PMS said he was sure Richard Lambert would acknowledge that the UK had suffered a deep recession and it was not unusual to see this choppy period coming out of recession.
Asked if the Government thought that there wasn’t much it could do to support growth, the PMS replied that the Government believed that there was a lot it could do to improve the business environment in this country. One of the things discussed in Cabinet this morning was how we could ensure that we stuck to the Government’s policy on limiting regulation.
On whether there had ever been two consecutive quarters of negative growth following past recessions, the PMS said that there had been in the 1970s.
Asked whether the plan as it stood would be ‘finessed’ at all, the PMS replied that the deficit plan we had was the deficit plan as set out last year.
Asked if the Prime Minister thought he had secured an economic recovery, the PMS said that the Prime Minister thought that if people looked at previous experience, these choppy periods were not uncommon after recessions. On what the Government planned to do to aid the construction industry, the PMS replied that one of the things the Government would do, would be to look very hard at the country’s planning laws.
Asked when a choppy period stopped being choppy and became the new reality, the PMS replied that we had said there would be a choppy period and that’s what we were seeing.
Sky
Asked if the Prime Minister thought that Ofcom was doing a good job, the PMS said that Ofcom was an independent regulator.
Asked if the Prime Minister still wanted to change or abolish it, the PMS advised people to speak to DCMS about the Government’s policy on Ofcom.
Asked if the Prime Minister was happy with the idea of a delay over the referral process, the PMS said that the Prime Minister did not have a role in that process, so would not be commenting on it.
The PMS said that this was a decision for Jeremy Hunt; he would act in a quasi-judicial role and there was a strict process in place. He would take advice from his officials and lawyers and the process would be followed to the letter.
On whether Jeremy Hunt discussed his decision to refer it with the Prime Minister, the PMS said that the Prime Minister first learned of the decision when he heard about it on the radio this morning.
Misc
Asked if the Prime Minister had any fears over whether his phone had been hacked into, the PMS said no, he did not.
Asked about the Russian airport bomb and whether there was any more information, the PMS said that there had only been one British fatality, rather than two, as had been reported in some areas today.
Asked what the Prime Minister discussed with Alexander Lebedev in their meeting, the PMS said that he would not be commenting on every meeting the Prime Minister had.
Put that the two did meet, the PMS said he wouldn’t confirm that, but as people knew, the Prime Minister did meet people from the media from time to time.
Asked if Downing Street would be getting a cat, the PMS said that no decisions had been taken.