George Osborne is currently enjoying that most precious of political commodities: luck. Having narrowly avoided an increase in the deficit earlier this week, the Chancellor has now dodged a triple-dip recession. The ONS’s first estimate of GDP for Q1 of this year suggests that output rose by 0.3 per cent, three times greater than the 0.1 per cent forecast by most economists.
Economically speaking, it makes little difference whether output is found to have marginally grown or marginally shrunk. The figures are revised by an average of 0.4 per cent and the economy is now merely the same size as it was six months ago. But the politics are all important. For Osborne, growth, however anaemic, allows him to maintain the narrative that the economy is “healing”. Expectations have been so downgraded that any rise in output is now welcome.
The return of the economy to growth will help the Tories to maintain the political momentum that they have enjoyed in recent weeks. At the same time, it will add to the pressure on Labour to outline a clearer alternative to the coalition’s programme. Even after a double-dip recession, the loss of the UK’s AAA credit rating and countless missed borrowing targets, polls show that Osborne and Cameron are still preferred as an economic team to Ed Miliband and Ed Balls. By two-to-one (59-29 per cent), the public still believe the cuts are necessary and by 36-24 per cent, they still blame the last Labour government more than the coalition for them. In the three years since the government came to power, these ratings have failed to shift in Labour’s favour. This fact, combined with the prospect of a sustained period of growth, is one reason why, for the first time in months, Tory MPs are starting to believe that they can win in 2015.
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