Why did the British economy--to the surprise of many--shrink by 0.5 percent in the last quarter of 2010? According to the U.K.'s Office for National Statistics, gross domestic product would have stayed flat had it not been for the snow and ice that descended on Britain in December, forcing people to stay home in the days before Christmas and battering the services industry.

Responding to concerns about the economy's unexpected contraction, Chancellor of the Exchequer George Osborne refused to back off the austerity program he and Prime Minister David Cameron are pursuing. "We will not be blown off course by bad weather," he declared.

But Ilargi at The Automatic Earth, hardened by his years living in snowy Montreal, is incredulous that the U.K. is blaming its economic woes on mere inches of precipitation in the final weeks of 2010. During the first two months of the fourth quarter, he explains, "there was nothing that even the Brits could name 'extreme weather'. Ergo, the UK economy is simply in real bad shape, rain or shine."

He points to a statement by Bank of England chief Mervyn King that British households are experiencing the greatest decline in their living standards since the 1920s, and that plummeting disposable incomes are the "inevitable price” of the financial crisis. The real issue in the U.K., as in the U.S., is that the government is prioritizing Wall Street over Main Street, Ilargi argues:

[It's] not even that the "standard of living is plunging" at its fastest rate in almost a century, it's that the standards of honesty and dignity, of how to build a society, are plunging. Corruption and fraud have free rein ...

Yes, your future looks bad, and Mervyn King is telling you it would have been worse if you hadn't bailed out the bankers and made sure they got their X-mas bonuses. Come to think of it all that way, how is it possible that Britain doesn't yet look like Tunisia, Yemen or Egypt, why are there no people in the streets, no riots, no nothing of the kind? It's not as if the Brits have rosier futures ahead of them [than] the Egyptians.

(h/t: Business Insider)

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Uri Friedman