You could have heard the muttered oath, “Thank god for the Olympics”, run through the British government last night. Only a couple of days to go before the five-ringed circus that will divert voters for 17 days away from the growing evidence that Britain is being run by an inept bunch of Old Etonian toffs and camp followers.

Data out overnight showed that the UK economy is now in the midst of the worst economic slowdown for more than 50 years. The last double dip was in 1975 and 1976 and the then Labour government was forced to turn to the IMF for help. The economy is sliding at an annual rate of more than 2% after the first estimate of June quarter growth shocked economists by coming in at negative 0.7%, instead of the confident market forecast of negative 0.2%. The British economy is now smaller than when the Tory-led Coalition came to power.

Dismayed forecasters suggested an extra day’s holiday for the Queen’s Jubilee led to the wretched result. When they start blaming the Queen for the UK’s woes, you know things are dire.

After negative growth in five of the past seven quarters, the UK now has a distinct Latin tinge to it. Could the acronym PIIGS (Portugal, Ireland, Italy, Greece and Spain) be expanded to include the UK? (and how would we pronounce it if it did?) Based on growth performance, the size of the deficit and debt, it’s a candidate. Spain contracted by just 0.4% in the second quarter, while in aggregate, the eurozone is expected to shrink only 0.2%.

The only thing keeping the Brits of the group would be that it has its own currency and has proved to be something of a “safe haven” with bond yields falling to record lows as investor seek shelter from the coming disasters in Europe.

But in reality it’s time for yet another sick man of Europe to stand up and fess up to the reality of economic policy making: austerity doesn’t help you grow and create jobs, and particularly not when your most important markets are embarked on the same fiscal self-flagellation. In such circumstances, austerity just sends you backwards. Ask the lot down in Greece, or the Irish, the Portuguese, the Spaniards, and the Italians.

“It’s vitally important that we redouble all our efforts to get on top of our debts, deal with our deficit, get our economy moving,” was the response of Prime Minister Cameron, suggesting that even these dreadful numbers haven’t sunk into the expensively educated brains of either Cameron (Eton and Brasenose, Oxford) or Chancellor George Osborne (St Paul’s and Magdalen College, Oxford). Redoubling efforts to get on top of the UK’s debt will redouble the contractionary forces at work in the British economy.

One of Cameron’s and Osborne’s problems is that, while deep cuts are scheduled to be rolled out over coming years, current government spending has gone up slightly. Data from the government’s statistics office showed that there was a rise in government spending in the quarter — and it contributed 0.4% to overall growth.

For Cameron, it’s more of the annus horribilus that is making his Prime Ministership a disaster. His good mates the Murdochs and the Brooks have been publicly humiliated or will be facing the beak for phone hacking and sundry other offences. He’s simultaneously brawling with the Europeans and with Europhiles and Eurosceptics in his party. He’s been humiliated over an astonishing debacle in Olympic security. His Coalition with Lib Dems appears on the verge of breaking down. And this week, Labour overtook the other parties in perceptions of economic management. Right on cue, the GDP figures served up evidence to back that up.

The appalling figures and growth record, especially in the past year, come after a cut in interest rates to 0.5%, £325 billion of quantitative easing by the Bank of England (that doesn’t include the £50 billion extra announced earlier this month) and more than half a trillion pounds of public borrowing since the recession began in 2007. While some of that borrowing went to bail out broken banks like RBS, much of it has just vanished into an economy that refuses to grow.

It is clear the Bank of England’s QE program is looking increasingly impotent in the face of weak consumer demand and a flailing construction sector. It may have helped steady the economy, but while the eurozone remains a disaster area, it won’t work to boost growth.

There’s now pressure from all sides on the Cameron government to ditch its focus on austerity and move to “Plan B” or, as one Coalition figure put it, “Plan A plus”.

The IMF warned last week that the Britain’s recovery had stalled and the government must be prepared to introduce a “Plan B”, involving spending more on growth-promoting policies, slowing the cuts and other austerity measures, and doing more to get lending growing in the still-damaged banking system (the growing Libor scandal is creating its own drag on credit creation). The government has already been forced to extend its deficit reduction target to 2017, and Cameron last week told Britons they face another eight years of austerity.

The problem is the austerity strategy relies on the economy growing at 2-3% a year. That simply isn’t happening. Watch for the credit rating agencies to take a look at weak growth, high unemployment and poor outlook and put it on a negative outlook, where it would join the likes of Germany, Luxembourg, Holland, France, Austria and France, which are already on a warning from Moody’s.

The Olympics and a make-up for lost production due to the Jubilee holiday is likely to see the British economy grow again in the current quarter, but forecasters expect another quarter of negative growth in the three months to December. The only really good news is on inflation, which is down to 2.4%, down from more than 5% a year ago.

All this is a message to the opposition here, with its hairy-chested rhetoric about out-slashing Wayne Swan for no reason other than because “Labor’s incompetent” and a signal of what lies ahead for Campbell Newman in Brisbane. His cheap line that his state is “the Spain of Australia” bears no resemblance to reality. But worse than pretending that his problems are anything like those of the Europeans is to act like they’re as bad as the Europeans”. In which case, Queenslanders better brace for years of a vicious circle of austerity and low growth.

Queensland isn’t Spain. But the Gold Coast has the Commonwealth Games in 2018 … is Queensland the new Britain?