Third quarter UK GDP data are likely to show robust growth – 0.8 percent or more, following 0.7 percent in Q2 – more kudos to a resurgent finance minister George Osborne who only a year ago was buried in brickbats.
We can argue about the austerity versus growth debate ‘til the cows come home – there is still a strong case that if the government hadn’t cut so sharply, growth would have returned earlier and debt would have fallen faster. But the fact that the economy is ticking along nicely 18 months before the next election means Osborne has won the argument politically.
And yet, and yet. The opposition Labour party has been nimble in switching its criticism from the government’s debt-cutting strategy to the fact that the economy might be recovering but the vast majority of Britons aren’t feeling it.
Wage growth is generally dwarfed by inflation and the cost of lighting and heating a home has rocketed. Labour has pedalled a utilities price freeze and even former Conservative premier John Major has suggested a windfall tax.
So expect a continued absence of crowing from the government, if it knows what’s good for it. “There’s a long way to go…” etc etc. It’s unlikely that the economy will continue to grow at this pace but the IMF’s forecast of 1.9 percent next year is achievable and would go a long way to winning the electoral economic argument.