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Today’s GDP growth figure could mean a political dividend for the Tories

29 April 2014

10:52 AM

29 April 2014

10:52 AM

Today’s GDP figures are another sign that the recovery is strengthening. The 0.8 per cent growth in the first quarter is equivalent to more than 3 per cent annual growth. This means that the UK is on course to have the fastest growing economy in the G7 this year.

The rapid fire press releases from Osborne, Alexander and Clegg this morning all strive to avoid saying that the job is done. But with the economy having grown 3.1 per cent since this time last year, it is clear that the economy is now on a far healthier trajectory. No one can say that it is bumping along the bottom anymore.

The crucial political question is, as always, when and how many voters will feel the benefits of the recovery. My sense is that by the autumn more people will be beginning to feel it. With the economy growing at this pace, more firms will begin to invest the cash they’ve been accumulating for the past few years—further consolidating the recovery. Also, I suspect that the next round of pay negotiations in private sector firms will begin to see a return to regular pay rises. If this happens, then the Tories can expect to yield a significant political dividend from the recovery. ​

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  • Smithersjones2013

    My sense is that by the autumn more people will be beginning to feel it.
    With the economy growing at this pace, more firms will begin to invest
    the cash they’ve been accumulating for the past few years—further
    consolidating the recovery. Also, I suspect that the next round of pay
    negotiations in private sector firms will begin to see a return to
    regular pay rises.

    Of course it is/ you do. Good Tory doormats are not going to urinate on their masters shoes now are they?

    Some things in life are bad
    They can really make you sad
    Other things just make you swear and curse
    When you’re chewing on life’s gristle
    Don’t grumble, give a whistle
    And this’ll help things turn out for the best…

    And..always look on the bright side of life…

    (Whistle)

    Always look on the light side of life…

    (Whistle)

  • Chingford Man

    This post has been brought to you in association with the Conservative Party: reducing the deficit so we deal with our debts.

  • serialluncher

    Osborne’s whole image and persona seems to have changed as a result. He’s not the kid anymore. He’s actually got a pair.

  • Frank

    Very strange that all comments on the Tory MP chiding Boris are closed after 13 comments!
    Is this because the Speccie doesn’t like having Boris criticised?

    • Smithersjones2013

      Well would you want to upset the former editor of your publication?

  • Frank

    Built on sand and could collapse at any moment if the EU/Russia dispute goes to the next stage, or if China fails to sort out its bubble.

    • Inverted Meniscus

      But we are in a better position than we would have been if the preposterous Ed Balls was Chancellor.

      • La Ritournelle – grrrrrrrrr…

        The toxic Coalition of Osborne/Alexander inherited a growing economy in 2010 which they killed stone dead with malignant, unnecessary austerity – economic incompetence that’s really quite hard to parallel. We all know what happens when you go on a starvation diet, as soon as you stop, you put double the weight back on.

        • Inverted Meniscus

          Except that we are talking about the economy not a weak willed dieter. The austerity measures, or living within our means as sensible people might call it, are a tiny percentage greater than those proposed by Gordon Brown. Had we made proper cuts to wasteful, unproductive public expenditure the economy would have rebalanced sooner and recovery would have been quicker and stronger. No doubt your solution would be to borrow and spend more and then close your eyes and pretend that the structural deficit doesn’t exist.

    • HookesLaw

      Even if true, thats no different than for any country so whats your point? Events happen.

  • Denis_Cooper

    The question is not just whether people will start to feel the benefits of recovery but also whether they will give the coalition government any credit for that.

    At present the number of people blaming the present government for making matters worse is similar to the number of people ready to give it any credit, for example, in this recent opinion poll, on page 2:

    http://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/l1m6nd2qg3/Sunday_Times_Results_170414_Economy.pdf

    “Who do you think is more to blame for people’s incomes not keeping pace with rising prices?”

    “The policies of the last Labour government” – 27%
    “The policies of the present coalition government” – 25%
    “Both equally” – 26%.

    Only 2% of those who intend to vote Labour blame the last government.

  • Greenslime

    It would be interesting to read Ed Balls’ comments on the situation. Anyone found him to ask?

    • Inverted Meniscus

      No but here goes: The recovery is too little too late and too many people are suffering from the cost of living crisis caused by this government who hate poor people and want to destroy ‘our’ NHS. I would have borrowed more and got the economy growing earlier and faster rather than flatlining for three years. I am sure he would manage a little more preposterous fantasy, economic madness and references to non-existent double, triple and quadruple dip recessions in his analysis but I suspect that this is a fair summary.

      • La Ritournelle – grrrrrrrrr…

        Given that Osborne and Alexander have borrowed more in 4 years than Labour did in 13, it seems less to do with fantasy and far more to with their total economic incompetence.

        • Inverted Meniscus

          When you inherit a structural deficit of £168 billion and an economy which has contracted by 7.4% the only way to avoid an increase in borrowing is to cut public spending in a manner that would make your eyes water. That would have been my preference. It is simply dishonest to suggest that the economy was growing sustainably in 2010. Darling and Brown pumped up spending prior to the election to create the illusion of growth. If you create money and spend it the statistically the economy grows but it is not sustainable. There was no sustainable recovery in 2010 and to suggest there was is both ignorant and deluded.

          • La Ritournelle – grrrrrrrrr…

            How is it ‘dishonest’ to tell the truth of the matter that the economy inherited by the Coaltion was growing in 2010 and the direct consequence of Osborne and Alexander’s economic ineptitude killed it dead putting us into a double-dip recession? Those are the facts. You (indeed no-one) cannot posthumously ‘decide’ the Labour-induced recovery was ‘unsustainable’ if the implementation of ideologically-driven austerity choked it off within the first 12 months of the Coalition taking office.

            • Inverted Meniscus

              Oh we are a bit behind the times aren’t we. Check the ONS growth figures which were subsequently revised upwards. Congratulations, you are the last person in the UK to learn that there was no double-dip recession. Even that incoherent, gibbering idiot Ed Balls has acknowledged that hence his resort to fatuous flat-lining gestures. If you pump borrowed money into the economy prior to an election the overall size of the economy will grow it is simple mathematics. You cannot keep doing that forever because all any of us would have to do is borrow as much money as possible and we would would all be rich it is like suggesting that the minimum wage should be £1 million pounds an hour. Check out Labour’s austerity plans, there is hardly a difference between their plans and those of the coalition. You have wasted enough of my time with your ignorance and dissembling so kindly go away.

  • david trant

    Just like it did in 1997, you remember. ‘The Golden Scenario’ which resulted in a Labour majority of 166.

    • Alexsau91

      Then the Tories had been in power for 18 years and Labour had a wildly popular leader made of teflon. They were always going to win, the Tories were trailing up to 20 points in the polls.

      Now, Labour are still blamed by most for the economic situation, people don’t trust them with the economy, they aren’t seen as a viable government – even by Labour supporters.

    • sarahsmith232

      Exactly right that isn’t it? ’93 to ’97 the economy was thriving, 5% in ’94, yet it resulted in a Labour landslide. They’d got rid of the minimum wage and so many people were earning a pittance. If you’ve got enormous great sections of society only earning £2.50ph in ’95/’96 then the Tories were out of their minds to imagine that any of those enormous great swathes were going to be so greatly impressed by their annual G.D.P numbers.
      Same mind set seems to have taken hold again with the Tories. When are they ever going to learn that actually, saying ‘it’s the economy’ is the stupid thinking.

      • Inverted Meniscus

        And yet it is a growing economy that pays for everything. Labour left a £167 billion structural deficit and a 7.4% contraction of the economy. There spending plans following the last election included a£20 billion reduction in spending on the NHS alone. So yes, it is the economy stupid.

        • sarahsmith232

          That’s an illogical statement. It’s the type of economy not the % it’s expanding by. If the economy did decide elections then there would have been no Labour landslide. So what if an economy expanding at a rate of 5% pays for the NHS if you’re only earning peanuts. Hardly makes up for it, does it? Espec’ not when you’ve got opposition politicians saying they’ll bring in a minimum wage and will increase the amount you can claim in benefit money. People are going to vote for that and wouldn’t care less about GDP growth.

          • Inverted Meniscus

            Gibberish, absolute gibberish.

            • sarahsmith232

              Ok, you’re completely missing the point. . . . again. You believe that it’s important, I’m not saying it isn’t important. What I’m saying is that politicians place too much emphasis on GDP growth and then go about with confused and disorientate looks on their faces when they get no joy back come election time.
              Yeah, yeah, GDP isn’t nothing, but if it doesn’t do any trickling towards most voters then it does amount to nothing. Like I say, if it isn’t resulting in increased standards of living then people are not going to care.
              Politicians are not getting this. Going on about something that doesn’t matter to people by telling them they’re wrong to believe that isn’t going to alter the fact that the Tories are going to fail to capitalise of this GDP growth come May 2015.

          • HookesLaw

            The economy was performing well in 94 -97 but the govt were controlling spending. Labour went on to bribe people with ther own money and turned surpluses into deficits to make make their spending sums work.
            Funny how things are hunky dory when Labour have growth but the BBC go round looking for discontent when the tories run growth.

            • sarahsmith232

              Agree with that, certainly Labour seemed to realise quite quickly that their planned for socialist utopia wasn’t exactly happening so instead resorting to ‘buying votes’ (and along the mass importing of a fair few million, as well). But then having said that, nevertheless, people were struggling back in the 90s and the Tories just didn’t give a stuff. ‘Course, Labour came along and made it all a million times worse. They were hardly the antidote. I’m just hoping Ukip will be able to give them all a good kicking.

            • La Ritournelle – grrrrrrrrr…

              “Labour went on to bribe people with ther [sic] own money” – What poppycock – it was called record investment in things like you know Schools, Hospitals etc. that’s what Govts are supposed to do. Not siphon it off to give their City mates a weekly taxpayer funded hand-job. That’s why Labour won three terms of office …. because not waiting on a trolley in a corridor for 18 hours or being denied routine surgery was incredibly unpopular causing misery and extreme anger up and down this land.

        • Mynydd

          Mr Osborne said he would clear the deficit by 2015. So answer these questions; will he achieve this? if not what will be the deficit be? You are wrong, Labour did not included a £20 billion reduction in spending on the NHS, their policy was for £20bn efficiency savings to be reinvested into front line services

    • andagain

      Worked rather well in 1983…

  • Blindsideflanker

    GDP means nothing especially when there has been little or no control of immigration. GDP per capita would be of more interest.

    • Inverted Meniscus

      Would you prefer a recession?

      • Blindsideflanker

        Well when you have 1% GDP growth and a 10% growth in population the result is a recession in peoples pay packets. Politicians may boast about a growing economy according to GDP which is pretty hard not to achieve when you are growing the population , but where people are concerned it isn’t GDP growth that matters but GDP per-capita.

        • Inverted Meniscus

          I have an economics degree so yes I understand all of that. Would you prefer the country to be in a recession?

          • Blindsideflanker

            You have to quantity it. We can all say hooray we have got GDP growth,but it is bloody useless if we are all getting poorer because the limited growth is shared around more people. They can ship in a billion people who all buy a Mars bar and the politicians can say Oh look we have GDP growth, but it would be pretty catastrophic to most peoples living standards. In that case it would be GDP growth we could well do without!

            • Inverted Meniscus

              So would you prefer the country to be in recession?

              • Blindsideflanker

                Before I completely dismiss you as a Troll…

                I-N W-H-A-T C-O-N-T-E-X-T ?

                • Inverted Meniscus

                  Well see if you can get your head around this: the figures produced by the ONS today suggest that the economy as a whole is growing. You have subsequently provided a kind of GCSE analysis that per capita figures are a better indicator and arguably they are. That said, you imply that today’s figures are meaningless which is obvious nonsense because economic growth is generally considered better than stagnation or contraction. By all means try and demonstrate how clever you are to the less informed but to imply that accelerating economic growth is to be ignored is palpable nonsense. My question therefore remains apposite. Incidentally, writing in capital letters simply confirms you are an idiot rather than leaving a little room for doubt.

                • La Ritournelle – grrrrrrrrr…

                  You have a degree in Economics? I don’t even have an ‘o’ level in Maths and even I can do the sums here in this debate !

                • Inverted Meniscus

                  There is no debate with leftists you just assert your crazy views and hate anybody who doesn’t agree with you. That is what socialism is.

        • HookesLaw

          10% growth in population in 1 year would be 6 million. That has not happened. Current growth per annum is 3 %.

          • Blindsideflanker

            But over four years of this Government we had our economy at a stand still, but they were shipping people into the country at the rate of 1/4 million a year. So they managed to add one million people to the country’s population, which meant the available GDP had to be spread around more people. No clues needed why people are feeling poorer.

            And it also seems to have slipped your notice that politicians boast about there being more people in work than ever in our history, yet with all these people in work paying oodles of taxes we can’t balance the books. One of the reasons why is that what is being created is a low wage economy with lots more people, and that is why for British people a more important statistic is GDP per capita.

      • Mynydd

        I would have preferred four years of growth of at least 1% per quarter, which is what the last government achieved after bring the economy out of the recession. I would also point out that during Mr Cameron/Osborne’s time in office there have been four quarters with negative growth, that is equivalent of one years contraction of the economy. When will this be made up

        • Inverted Meniscus

          I have observed that, together with Telemachus, you are the Labour Troll/Stooge of choice who simply makes things up. There has been no recession since the Coalition took over as demonstrated by the ONS statistics. That has been no double dip or triple dip and peddling that particular lie will not make it true. The last government pumped a vast amount of money into the public sector in the run up to the last election which as such measures invariably do, proved unsustainable. The present government is slowly switching resources from the public sector which generates no growth to the private sector which does. This process is imperfect and far more substantial cuts in public spending would have accelerated that process. Nevertheless, we have the fastest growing of all major western economies. Not bad after inheriting a £168 billion structural deficit and a 7.4% contraction of the economy. But just you and Telemachus keep posting your rubbish and dishonesty because you give the rest of us a good laugh. Now get lost.

          • Mynydd

            I have not made anything up, when Mr Cameron took office the economy was out of the recession, and the economy was growing with a reported GDP growth of 1%, fact. During Mr Cameron/Osborne’s term in office there have been 4 quarters of negative growth, fact. Negative growth means a contraction in the economy. Now answer me, where in my comment did I say there was a recession, or even a double or triple dip one while the Coalition have been in power. So how can I be peddling a lie. You may not like them but facts are not rubbish, and it’s not dishonest to quote them.

            • Inverted Meniscus

              I have already spent too much time explaining matters to am obvious Labour Troll. Yes you idiot you can create the illusion of growth if you sluice money into the public sector as Brown/darling did prior to the last election. Now get lost and stop soiling rational debate.

              • Mynydd

                Answer the question; how can I be peddling a lie, or is it now the case that the facts that don’t suit your views are all lies. By the way I have made no comment in respect to the economic actions taken by Mr Brown/Darling during the run up to the 2010 general election. How can I be spoiling a rational debate when you, not me but you, have failed counter the facts put forward, especially when you have reduced the debate to name calling such as, Labour Troll and idiot.

                • Inverted Meniscus

                  Facts! Now you really are having a laugh. Talk it over with Telemachus your fellow Labour Troll.

    • sarahsmith232

      So absolutely agree. From ’01 to ’07 this countries economy was doing really well, averaging a 3.2%/3.4% but people weren’t doing better. If your biggest outlay is a house and 67% of the reason why their prices are so high is because of immigration then who cares about G.D.P growth, makes didely-squats difference.
      Personally I think the fact that such a large percentage of our young ‘best and the brightest’ see no future here and want to get out, ‘course are also able to do so, is really being underestimated. Just read that there’s been a crisis in the NHS ’cause they can’t get the doctors, the issue isn’t low numbers completely the training it’s that they all leave the country, apparently Oz being the main beneficiary. So they’re having to fill the gap with not fully qualified Indian ones.
      The country is a mess, the Tories have made zero difference and then they wonder why they’re getting no poll bounce from their ‘saving’ of the economy. Cameron is a joke, no different from some 1990s New Labour Metro Spad, that’s basically all he is. Useless.

      • Inverted Meniscus

        Fatuous. The Tories efforts are far from perfect but the structural deficit has been reduced by a third and the economy is growing faster than any major western economy. I am no apologist for the Tories, they should have made significant cuts in public sector spending in order to rebalance the economy faster, but to say they have done nothing is both lazy and risible.

        • sarahsmith232

          What on earth are talking about dear? If you’re an economist then I don’t doubt that you’ll be aware that during the last decade, and pre the crash, the American middle-classes standard of living actually dropped. During that time the economy was doing well. All moving towards the top though, the benefits weren’t evenly being felt.
          Also, Japan, v.much one in the eye to the open-door lot, during their lost decades the income per capita was increasing at a faster rate that the rest of the G7, their GDP wasn’t increasing but this wasn’t reflected in their standard of living.
          Going on about reducing the deficit is going on about nothing from the point of view of the average voter. Then going on about GDP instead of income per capita, really is just going on about absolutely nothing whatsoever. People want to know about what’s increased their standard of living, mass immigration certainly is not an e.g

          • Inverted Meniscus

            So nothing has improved since 2010 when the government inherited an economy that had contracted by 7.4%. The suggestion that a structural deficit of unprecedented proportions is irrelevant is beyond parody. Do you know what a structural deficit is dear? Yes the average voter would like to feel better off – where do you get these amazingly insightful perceptions? Before they can feel better off there has to be a massive rebalancing of the economy between the private sector which generates wealth and the public sector which spends that wealth. Also amazingly, that is not an instantaneous process and with a structural deficit of £167 billion to contend with will probably take 20 to 30 years. Your assertion that the current government has done nothing is, as I said fatuous. Now run along and stop involving yourself in matters you don’t comprehend. Dear.

            • sarahsmith232

              Luvie, not only do I know what a structural deficit is I also understand why their tackling of it is not winning them any favours. Do you? Oh, I’m going to go with a no on that. So, in which case, allow to be your guide, you can read my post above this one.
              The Tories have not amounted to a hill of beans in the whole scheme of things. We’re still living in a New Labour England, reason being, that’s all Cameron is, a 1990s Metro’ New Labour clone.

              • Inverted Meniscus

                I cannot be bothered with such vacuous ignorance. Go away.

                • Blindsideflanker

                  I am surprised to say it but try listening to Robert Peston on PM, who at 5:20pm has just made my point, or is that someone else of ‘vacuous ignorance’ ?

                • Inverted Meniscus

                  Wow Robert Peston ! You must be thrilled. The point is that GDP is an indicator of economic growth or otherwise. If you want to want to make the point, albeit blindingly obvious, that a per capita analysis provides a clearer picture of individual prosperity or otherwise that is fine. The point is that positive GDP figures, such as those reported today, are generally regarded as a good thing and certainly better than contraction. The suggestion that positive GDP figures are meaningless remains ridiculous and are surely better than a recession.

          • Benjamin

            “Going on about reducing the deficit is going on about nothing from the point of view of the average voter.”.

            I’m pretty sure the average voter doesn’t want a sovereign debt burden the size of America’s $17trillion either. Unless the average voter is a fool, they know that superfluous government borrowing is a bad sign for the generations to come and it needs to be addressed. We were ignorant to the proliferation of debt before the 08 crisis, so let’s not continue that pattern.

            • sarahsmith232

              Actually, it’s how the deficit is cut is what concerns a voter, not whether it should or should not be cut.
              Their concerns are 100% ego based. Everyone in the run up to the 2010 election wanted Labour’s out of control spending reigning in but this was only because they believed that this was profligate spending of their tax money on the un-worthy. When it came to spending on the worthy (i.e themselves and their own) they were up in arms at the first whiff of there being a possible cut coming.
              The oldies go bananas if they sniff a threat to their free bus pass, it’s the un-worthy the Tories should be going after, like the single mums, reduce the benefit cap further, etc. The single mums don’t see themselves as the un-worthy recipients though, so they want the ‘rich pensioners’ to get the cuts. You know, etc, etc.
              So all in all, the Tories going on about the importance of deficit reduction isn’t going to prove a vote winner, ’cause all anyone will hear is – i’m into one of their swivel eyed categories, so i’m going to be in for a cut, so solution- vote Labour. It’s not a smart move for a pack of politicians that couldn’t even win a majority against G.Brown, (the above is part of the reason why, BLT)

          • La Ritournelle – grrrrrrrrr…

            ” while our national income is almost back to where it was before the crisis (rejoice!), our GDP per head remains almost 7% below where it was at the start of 2008. The Britons of 2014 are as poor as they were in 2005″

            Aditya Chakrabortty in the Guardian 28/04/2014 ….

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