Economic growth: how will Labour benefit?

By Alex Smith / @alexsmith1982

The UK economy is now out of recession, showing a 0.1% growth in the last quarter between October and December, 2009.

But economists had been predicting growth of between 0.3 and 0.4%, and ONS figures now show that GDP fell by a record 4.8% in 2009. So while the recovery still remains “frail” and “uncertain”, Alistair Darling will remain “cautious” and Gordon Brown will be further determined not to withdraw the stimulus early.

So what does today’s news do for Labour’s electoral prospects?

George Eaton, writing at the New Statesman blog The Staggers, says:

“After today’s figures, Labour can persuasively argue that we’d still be in recession now if it hadn’t been for the government’s Keynesian spending boost. But even if growth picks up later in the year (and it’s a big if) the government is unlikely to receive much credit. As I’ve noted before, while voters may blame governments for economic failure, they rarely credit them for recovery.”

Last August, I warned that green shoots alone would not be enough to salvage Labour’s chances of winning the election.

So to show further leadership on the economy – and the stimulus and car scrappage scheme are both being applauded today as factors in the recovery – Labour must now reiterate how it intends to change and diversify for future growth. It should also be careful not to engage the Tories’ plans for earlier cuts: David Blanchflower – amongst others – still fears a double dip recession should such policies be followed.

So it will be the next set of figures, due on April 23rd and just a couple of weeks before the election, that will have the more significant impact.

Today’s news provides a limited opportunity for Labour to speak up about how its measures have aided the recovery and to continue to advocate for an active Government in a broader strategic context. But the debate is by no means won, nor the recovery.