The results just out for the UK's economy follow hard on the heels of those for China and the contrast could hardly appear starker. The UK just about managed to crawl out of recession at the end of 2009 with a meagre 0.1% growth in the economy from Q3, leaving GDP still down by about 3% from the already depressed level of late 2008 and putting the annual average for 2009 at -4.7%. China managed to deliver GDP growth of 8.7% in 2009, almost on a par with 2008.
In one respect, the UK is similar to China: both economies are out of favour with commentators. Whatever is reported, the critics seize on the news as a further sign of poor policymaking and potential disasters ahead. China is too hot, the UK is too cool, and both are seen to be at risk from inflation and property boom/busts.
Perhaps it's little consolation but, examined carefully, the UK's performance is little different from the Euro area. Notably Germany's recovery is widely seen as stalling in Q4. Both the Euro area and the UK are markedly weaker than the US, to the chagrin of many in Europe. More generally, with the exception of 'too hot' China, Q4 growth has been disappointing even in high-flying Asia: Singapore dipped into recession again while South Korea registered a paltry 0.2% boost. In this regard, China deserves more credit than it ever receives for its economic management, not just recently but over many years acting as a mainstay of growth in Asia.
Markets are not in a mood to be pleased. The combination of Greek debt worries as well as the backlash from President Obama's proposed reforms to the US banking sector (which seek to curtail what are seen as high risk activities) have contributed to the general state of unease which prevails on both sides of the Atlantic. Back in early 2009, markets quickly rallied on the first hopes of 'green shoots' - signals that the global economy had hit rock bottom and was poised to begin its long climb out of the abyss. But today there seems to be no shortage of doomsday scenarios for 2010-2011, something that will undoubtedly seep further into market sentiment. In turn, this will affect actual economic outcomes, reducing the likelihood of a rebound in investment and employment.
For the UK, 0.1% quarterly growth is clearly far from enough to satisfy the need for a more positive prognosis, especially as the first quarter of 2010 is also likely to be very sluggish. Talk of a dire economic outlook for 2010-2011 will almost certainly remain in the ascendant - solid evidence of a robust recovery with tangible effects on business and consumer prospects will not be forthcoming until the summer at the earliest. This could not have come at a worse time for the UK as the political parties will argue even more than usual over how bad the situation is and may yet become. Solidarity in fighting off both recession and the threat of a UK credit rating downgrade would have been more helpful. But the reality is that a general election looms on the horizon and the already acrimonious debate over how to control the UK's public sector deficit may soon have the added dimension of how to kick-start sagging growth - an even tougher agenda.
Ultimately, the issue of deficits always has the simple, if unpopular, solution of cutting spending. Devising a new formula for reviving growth, on the other hand, is far harder than wielding the budgetary knife.
Towards a Post-Crisis Economy: Sombre Mood as Recovery Limps into 2010
Programme Paper, January 2010