Cold comfort

GEORGE Osborne didn't actually tell Britons to "keep calm and carry on" yesterday, but the phrase could well have floated across his mind. After the nation, and, no doubt, many in the Treasury, received a shock from the sharp shrinking of the economy in the final three months of last year, the Chancellor's attempt at reassurance came straight out of the form book of his ameliorative predecessor. Confidence, as both Mr Osborne and Alistair Darling would say, is key.

So how bad a state are we in? Britain could be on the brink of another recession, but the speed of the slump has undoubtedly been hastened by the appalling weather. The coldest December since records began, in 1910, hit Christmas shopping, as well as the bellwether construction sector, contributing to the woes of traders in the supply chain, particularly small businesses.

This partially explains the severe 0.5 per cent contraction.

There is no doubt the scale of the Government's spending cuts has also hit the economy, particularly in this region, where the outgoing Yorkshire Forward had a major impact on stimulating growth.

Mr Osborne, who argued that the coalition had little choice but to slash spending immediately, has staked his reputation on the premise that enduring some short-term pain will produce a long-term gain. Neither he, nor anyone, can yet tell whether he is right.

The next set of figures, covering the first quarter of this year, will be awaited with the keenest interest.

The path of the economy is not yet set, and leaders in politics and finance must do more to stimulate growth.