Today’s GDP growth of 0.6% (so widely predicted over the weekend it’s hard not to believe it was briefed out) is good news for the government, good news for British business and – it should not need saying – good news for the British people. Ed Balls has quite rightly pointed out in advance that the proceeds of growth are skewed towards the richest in society (although I fear he made the argument too late) but I think we can all agree that in the broadest sense a slowly growing economy is better for “hard working ordinary working people” than a flatlining or shrinking economy.
Yet there will be some who will try to spin today’s promising GDP figures as “bad news for Labour”, but that’s only the case if the Labour leadership walks into the trap of grumbling about Osborne’s manifest and repeated failures (which are a matter of record) rather than welcoming this rare success. Unfortunately, the appears to be exactly what the party is doing so far, by focussing on Osborne’s failures it looks like we’re talking down the economy and denying some undeniably good news.
In fact, what Ed Balls and Labour’s Treasury team should be doing today is congratulating the Chancellor on this promising growth spurt – and urging him to repeat this level of growth (and build on it) in each and every quarter between now and the election. Doing so has three distinct benefits:
It creates a high bar for the Chancellor to cross: Repeating this level of growth – or better – in every quarter between now and the next election is a huge ask for the Chancellor. In fact, it would need Britain to start achieving annualised growth of 2.4%. To put that into perspective, since George Osborne’s spending review in the autumn of 2010, the UK economy has grown by just 1.7%. The economy may have started crawling towards recovery, but the British economy is still a mess. Balls should be saying “well done, now do it again I dare you”, not “Oh, I see you’ve managed some growth, about bloody time”, because…
The public don’t like it: The vast majority of the public don’t follow the economy day in and day out. But what they do know, after decades of politicians saying it, is that growth is good. If Ed Balls comes on TV and says “Yes, but…” all they see is an opposition politician trying to talk down what appears to be a “good thing”. Only by welcoming the growth warmly and acknowledging that this is good news does Labour get listened to enough to make the case that we could grow the economy better than the Tories.
Growth is good for the next Labour government: Despite all of the party’s debates about governing with less money around, when push comes to shove, Labour will always want to spend more money, if possible, than the Tories. We believe – fundamentally – in the transformative power of the state. A growing economy cuts the deficit faster, means fewer cuts are necessary and allows greater government spending. The worse the economy performs between now and 2015, the less Labour can do in government. Labour should be saying “we’re glad growth is returning, for now, and we hope that will leave the British economy in a strong enough position to have a proper debate about priorities in 2015”. And if we’re smart, thats an argument we can win.
However if Labour falls into the trap of repeatedly attacking Osborne, then don’t be surprised if the Chancellor starts throwing “Jobs and growth” back in our faces. Because he can now credibly say that he has delivered both jobs and growth – and I’m not sure we have a good enough answer to that riposte yet.