Osborne should prepare for a triple-dip recession

After returning to growth in the third quarter, the economy is in danger of shrinking again in the fourth quarter.

The hope among the Conservatives is that the next set of growth figures - released on 25 October - will allow them to promote a narrative of economic recovery. It seems likely that the economy finally returned to growth in the third quarter after three successive quarters of decline.

In its latest set of forecasts, Ernst & Young predicts growth of 0.7% in Q3 as the economy benefits from the inclusion of Olympics ticket sales (which are expected to add around 0.2% to GDP) and recovers the lost output from the extra bank holiday in the previous quarter. This would represent the strongest quarter of growth for more than two years, but if we strip out the temporary factors I mentioned, the figure would be just 0.2%. Worse for George Osborne, Ernst & Young expects growth to slow to just 0.1% in the fourth quarter.  As New Statesman economics editor David Blanchflower wrote in his most recent column, "We are in the slowest recovery since the Second World War and are perhaps even heading for a triple dip."

Bank of England MPC member Martin Weale has similarly warned: "The Jubilee depressed output in the second quarter so you get an automatic bounce back. But if we talk about underlying growth then I think the economy is flat. I certainly would not say there is no risk of [a triple-dip recession] happening." Martin Beck, UK economist at Capital Economics, told the Today programme last week: "we expect the economy to start contracting again in the fourth quarter."

Rather than heralding a sustained recovery, as the Tories hope, the Q3 figures will more likely represent a false dawn before growth vanishes again.

George Osborne gives a television interview during the Conservative conference in Birmingham last week. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.