— Mike Smithson (@MSmithsonPB) November 2, 2012
Henry G Manson on the politics of the GDP figures
So eager were the Conservatives to trumpet the latest quarter’s economic growth figures that David Cameron almost fell foul of the rules preventing him from breaching the official publication time. The Prime Minister told Ed Miliband in a heated exchange at Prime Ministers Question Time a fortnight ago before blurting “the good news will keep on coming” which many took to suggest the following day’s growth figures would be positive, which they were. The Chancellor used the figures to justify the government’s economic strategy and held it up as proof that they were “on the right track”.
Later on the very same day bad news bit the government on the backside with the surprise announcement by Ford that 1,400 jobs would be cut in Southampton and Dagenham. Other less encouraging news has emerged with manufacturing in slowdown once more undermining government efforts to rebalance the economy away from the financial sector. The high street is still struggling with a growing number of well known firms posting lower profits or even close to administration.
That’s not to say that there hasn’t been good news. The anticipated £20billion inward investment in nuclear energy is huge. Unemployment continues to fall. But the there are some genuine fears that the next quarter of growth could in fact be negative. It’s always struck me as odd that it takes two consecutive quarters to count as a recession, but only one quarter of growth to end it.
Many are aware we’re out of the double-dip and may be quite shocked if growth was reduced next quarter and alarmed if it went into reverse.
One or two commentators are even raising the unprecedented prospect of an imminent ‘triple-dip’ recession. How on Earth would George Osborne respond to that?
These are unchartered times and no government is in control of its economic fortunes. I can’t help but feel that last quarter’s figures were held up for show and over-celebrated out of short-term political necessity, which risks real political problems if its not sustained.
Contrast with the more cautious tone of seasoned veterans such as Ken Clarke and Vince Cable. Clarke instead chose to talk of a ‘long haul’ to economic recovery in January. This week Cable warned the economy would likely ‘zigzag’ its way back to better health.
That’s not the message coming from Cameron and Osborne. Downing Street and Treasury expectation management may need to start sooner rather than later if dark clouds remain on the horizon.
Henry G Manson
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