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22 October 2013updated 12 Oct 2023 10:44am

Why the falling deficit could be good news for Labour

The smaller the deficit becomes, the harder it will be for the Conservatives to make it the defining economic issue. Labour can continue to shift the debate to living standards.

By George Eaton

So us Keynesians were right when we said that growth is the best antidote to debt. With output finally rising (by as much as 1% in the most recent quarter), the deficit is falling. The latest figures from the ONS show that the government borrowed £11.1bn last month, £1bn less than in September 2012. The total deficit for the year so far is £56.7bn, down from £62.6bn over the same period last year. 

At first glance, this looks like good news for George Osborne. The Chancellor’s deficit reduction plan might still be off-track (with austerity extended by three years until 2018) but the fiscal position is better than expected a year ago. When Osborne delivers his Autumn Statement on 4 December, he is likely to announce significantly improved forecasts from the Office for Budget Responsibility. But there at least two reasons why it’s Labour, not the Tories, that could benefit from a falling deficit. 

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