End to recession gives hope to coalition partners

David Cameron and Nick Clegg The figures will boost ministers as they seek to argue that the economy is on the right track

Forget for a moment the debate about margins of error, the impact of the Olympics, and the bounce back from the Jubilee bank holiday.

Ignore the talk of preliminary figures and how they compare with this financial quarter or that.

Turn down the sound on your telly so the cacophony from dissenting economists is dimmed. And put aside, too, the chancellor's cautious, mixed metaphors about the government laying down the foundations for a healing, rebalancing economy that's on the right track.

The truth, if you will forgive my own mixed metaphors, is that it is very difficult to claim with any certainty whether today's growth figures mark a turning of the tide or a false dawn for the economy.

But the political significance is undeniable:

1. The figures allow the Conservatives and Liberal Democrats to hope. It allows them to dare to believe that Plan A might just work, that somehow in two years time they may be able to go into the election saying the pain has been worth it. And political confidence, like economic confidence, is a prize worth having.

2. It allows the coalition parties to begin rehearsing their argument for the next election, namely their claim that the economy is on the right track and voters should not risk it all by backing Labour. That is not an argument any government can make convincingly when the economy is in recession.

3. It puts pressure on Labour to come up with a strategy that responds to this argument, namely how it will claim that they would manage the economy better when there may be some sustained growth by 2015. In other words, how will Labour offer greater hope when its message thus far has been one of gloom? Will warning the government against complacency and calling for a VAT cut be enough?

4. It could have been so much worse for the government. If there had been no growth despite the Olympics and so on, there might have been a crisis of confidence among Conservative and Lib Dem MPs who are looking closely at their majorities and turning their minds to the general election.

5. Perhaps most importantly, it gives the government the chance to try to break out of the awful run of bad news that has hung around its neck since the economy fell into recession and the Budget collapsed into omnishambles. After months of headlines about pasty taxes, plebgate, confusion over energy policy, West Coast mainline chaos, G4S Olympic security muddle, abandoned Lords' reforms and badger culls and so on, the government will hope it has a chance to change the narrative.

But, to misquote Mr Marvin Gaye, it is not clear that "statistical healing is good for me".

Those around George Osborne have for months been - perhaps a tad optimistically - arguing that once the economic figures turn around, then the political figures will shift too.

But what matters are not just economic figures, but how voters feel about the economy. Do they feel secure in their jobs? Do they feel confident they can find a job? Do they feel ready to risk an investment to grow their business? Above all, do they believe the government is competent?

And as we saw from Prime Minister's Questions this week, that is a running sore in the side of this administration into which Ed Miliband will happily pour much salt.

Just ask Sir John Major. He had several years of growth under his belt by 1997. And a fat lot of good it did him.

James Landale Article written by James Landale James Landale Deputy political editor

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  • rate this

    Comment number 47.

    You've quoted a blogger who has cherry picked his figures for his arguement. The article lost all relevance when he claimed Labour wont defend themselves because they dont want to win in 2015. They dont want to make the hard choices and become a nasty party.
    If their record was so good and everything is fine and rosy, what hard choices?

  • rate this

    Comment number 46.

    I've been a Tory voter all my life...but never again! The present political set-up, continually 'tooing and froing' is destroying us, and the working class pick up the bill every time! It's time for a 'sea change' in the political landscape to save us in this country and Europe. The 'cuts' are just beginning, God help the working classes when they start for real! Look at Greece and Spain!

  • rate this

    Comment number 45.

    44.Joe Public - "Once we get Christmas and the New Year sales out of the way, I'm looking forward to a tripple-dip recession....."

    Yup, the economy was growing out of recession when the Coalition came in......their initial cuts (only 20% of the total cuts planned) caused the double dip......the triple dip when the other 80% kick in could be 4 or more times worse than the double dip......

  • rate this

    Comment number 44.

    Once we get Christmas and the New Year sales out of the way, I'm looking forward to a tripple-dip recession and the end of The Condoms (sic).

  • rate this

    Comment number 43.

    In a week of bright ideas (make pensioners look after the elderly to earn their pension, limit child benefit to 2 children in families on benefits) I have got a bright idea...
    Why don't the10% who hold most of the nations wealth give it away to the other 90% to help spread priviledge? (Gulp!)

  • rate this

    Comment number 42.

    36.Darren Shepperd - "typical pro tory crap that we have had from the BBC....."

    Do grow up - for every person claiming the Beeb is bias against the left there's someone claiming Beeb bias against the right.....

    ....you cannot all be right but you can all be wrong......

  • rate this

    Comment number 41.

    Pardon me but if you think this is because of one bank holiday, and the Olympics - where retailers saw a decline in trade - you are on the wrong planet.

    There is no growth because there is a) no lending and b) interest rates are so low people with savings are just sitting on them.

    Ford have shown that they have no confidencve in this government and are getting out. General Election PLEASE!

  • rate this

    Comment number 40.

    Treating public and private debt as similar is wrong. Private debt is many times higher than public debt. It was unrestrained private debt which caused the financial crisis. Because private debtors either cannot repay or because they are paying down their debts there is a lack of demand in the economy, hence unused productive capacity and unemployment. Public debt tries to put demand back in.

  • rate this

    Comment number 39.

    I think you're right. The implications are more political than economic.
    All of them will be trying to concoct a narrative out of very little, just one quarter's GDP growth.

  • rate this

    Comment number 38.

    The GDP Growth graph shows the banks causing the first big recession in 2008, then the Labour government creating consistent growth in 2009 and early 2010. Then the Condems get in and we get an unnecessary double dip. Whatever happens now their plan has failed and people have suffered unnecessarily. Remember the Tories always wanted no regulation on the banks.

  • rate this

    Comment number 37.

    And don't forget that the coalition has been rubbishing the GDP figures that showed 9 months of recession. Now we are expected to accept this wonderful 1% growth that puts us almost back to square one after a year as good news. All the commentators are saying this figure will be revised down. And what happens if the 4th quarter goes negative again?

  • rate this

    Comment number 36.

    typical pro tory crap that we have had from the BBC fror far too long its not british people spending it forigen tourists and inflated olympic prices once that is removed from the figures the truth is shown but the BBC dont want to say the truth we are going from recession to depression because 90% of the british population dont have any money to spend on anything other than surviving

  • rate this

    Comment number 35.

    John C @ 32

    We had 5 consecutive quarters of growth back in 2009/2010 following the crash - I think we need a fair few more before we can start to breathe more easily. That's not 'doom and gloom', just being realisitc. We are yet to come close to experiencing the impact of the vast majority of the coalition cuts and who knows how much toxic debt/derivatives are left in the banks?

  • rate this

    Comment number 34.


  • rate this

    Comment number 33.

    @30 Pleb

    "Large sections (but not all) of the private sector still have huge debt. Unsuprisingly they now want to reduce that debt & so spend less....."

    You appear to imply that reducing debt (in such circumstances) is a rational response for the private sector, but not for the public sector!

  • rate this

    Comment number 32.

    The figures are good news.A step in the right direction.
    If the next quarters frigures still show an upward trend we will all have to acknowledge that the gloom and doom guys were wrong.
    Too scary by far,to think, the gloom and doom people could be right.

  • rate this

    Comment number 31.

    further to 30
    Tory's claim that the private sector can replace the lost spending, particularly sme's, by borrowing from the banks & expanding, not only that they say this will create enough additional spending to allow them to cut public spending & reduce the deficit quicker.
    Labour say the same except some additional public spending is necessary to stimulate private sector spending + fewer cuts

  • rate this

    Comment number 30.

    Most the public sector debt came from nationalising (banks) private sector debt. Large sections (but not all) of the private sector still have huge debt. Unsuprisingly they now want to reduce that debt & so spend less, contracting the economy. If you don't want the economy to contract thereby reducing ability to repay the public debt then the lost private spending needs to be replaced

  • rate this

    Comment number 29.

    I am amazed, what are we like......some good news, things seem to be on the up even with all the bad news in Europe our major trading partner and yet most of these posts all seem to have their caviets. We know Labour are all nashing their teeth, but does the whole country want us to carry on going down the plug hole?

  • rate this

    Comment number 28.

    No8 Watford,
    With the lowest interest rates ever it is a good time to borrow.
    If borrowing to invest in infrastructure projects could create sufficient growth to increase tax revenues reduce welfare payments and reduce the annual deficit, would it be worthwhile? - and of course pay backthe borrowing
    It worked for FDR during the only comparable situation to our current crisis.


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