by Kevin Meagher
Confirmation from the Office of National Statistics that growth was indeed 0.3% in the first three months of this year – avoiding a triple dip recession – is good news for the economy – and potentially for Labour too.
Conventional wisdom has it that a return to growth is politically damaging for the opposition. At a stroke attacks on the government’s economic ineptitude lose their purchase. The gloom lifts. The Chancellor can puff out his chest and tell us the pain was worth it, the worst is past. Let, if not quite the good times, then certainly the better times roll.
But what if the opposite is true? What if rather than restoring the government’s fortunes the economy returning to growth is actually helpful for Labour?
After all we saw exactly this pattern through the mid-1990s when a reviving economy did little to refloat John Major’s political fortunes. In fact a return to growth may help Labour deal with its three big problems on the economy.
The first two are related to spending. Labour is committed to a temporary fiscal boost to kickstart the economy and knows it has little spare cash to meet its wider social democratic priorities. It remains elliptical about what it will do on either score and polls consistently shows the party simply isn’t trusted yet to run the economy, its third big problem.
Indeed, Ed Miliband’s reluctance to spell out how that stimulus would be paid for came glaringly unstuck during his interview with Martha Kearney on Radio Four’s World at One programme a few weeks ago.
Asked repeatedly if Labour’s approach would require an increase in short-term borrowing, he employed that classic Tony Benn tactic of answering a different question, maintaining debt would be lower in the long-term with Labour’s approach.
A spin of the news cycle later, Miliband was in safer environs on the Daybreak breakfast sofa conceding that, yes, short-term borrowing would increase as a necessary means of driving growth with in turn reduces longer term debt.
