Growth pains for economy

As Nick Clegg, the Deputy Prime Minister, made clear yesterday, the recovery will not be smooth – and it is misleading to pretend

otherwise. Take the housing industry. Though developer Redrow recorded a full-year pre-tax profit yesterday, social housing giant Connaught became the first high-profile casualty of the austerity drive this week.

Such conflicting occurrences will almost certainly be repeated in the months ahead as the impact of the coalition's cuts begins to be felt, and specifically in those communities that were allowed to become over-dependent on the public sector.

Given his chastening experience on his home patch after the Government withdrew a grant to Sheffield Forgemasters, Mr Clegg belatedly offered some reassurances in a radio interview yesterday when he said that the forthcoming spending review, which will require public spending cuts of around 25 per cent, will be phased in over the lifetime of this Parliament.

This was a recognition that the state simply cannot afford to preside over a programme of mass redundancies in one hit when so few new jobs are being created in the private sector. It will become self-defeating as the unemployment costs will outstrip the savings accrued by individual departments, quangos and agencies.

Of course, this situation could be eased by a new generation of entrepreneurs – and the new National Enterprise Academy in Sheffield, endorsed yesterday by Mr Clegg's erstwhile colleague Vince Cable, has the potential to inspire a new generation of business leaders.

Backed by Dragons' Den supremo Peter Jones, the academy is welcome, but it will take time to deliver results. History also shows that many successful entrepreneurs are self-made individuals,who are not necessarily college or university clones, and who became successful because the right economic policies were in place to enable private businesses to grow – and create new jobs.