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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