Labour’s right about the recovery

UK economy set to grow faster than its G7 rivals, new OECD data shows.

Are Gordon Brown and Alistair Darling right to argue that Britain is well placed to emerge strongly from the recession? Given the UK's overdependence on the financial sector and lower-than-expected growth in the fourth quarter of last year, you might assume not.

But new data from the OECD shows that Britain is on track to have the fastest economic growth in the first half of this year of any G7 country, bar Canada.

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The UK should grow at an annualised rate of 2 per cent in the first quarter of this year and at an annualised rate of 3.1 per cent in the second quarter.

It's good news for Labour and it looks as if fears that the next GDP figures, due out on 23 April, would show Britain falling back into recession have been overplayed.

It is also worth noting that the OECD again warns that early spending cuts could strangle the fragile recovery.

It said: "Consolidation should start in 2011, or earlier where needed, and progress gradually so as not to undermine the incipient recovery."

But worryingly for Europe, Germany, historically the EU's economic powerhouse, is on the verge of suffering a double-dip recession, with negative growth of 0.4 per cent in the first quarter of this year.

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George Eaton is political editor of the New Statesman.

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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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