Can Osborne avoid a double-dip recession?

The private sector remains sufficiently weak for any withdrawal of state support to be a concern.

With George Osborne unveiling £6.2bn of spending cuts today and the Queen's Speech taking place tomorrow, this is likely to be the most significant week for the coalition government for some time.

Osborne will be announcing the full details at a press conference at the Treasury at 10am, but he's just endured a grilling on the Today programme. The Chancellor sounded on top of his brief, but to my ear at least, his dismissal of fears of a double-dip recession seemed remarkably cavalier.

He began by stating that he had taken advice from the Bank of England and the Treasury (what if they're wrong?) and added that the cuts were "about showing the country we mean business". But Osborne ignored the fact that private-sector growth remains sufficiently weak for any withdrawal of state support to be a concern.

As Andrew Self, an economist at Markit, notes:

Whether or not the improvement in the private sector will offset the downturn in the public sector and therefore avoid a double-dip recession remains unclear.

Osborne is likely to receive a boost today when growth figures for the first quarter of this year are revised upwards from 0.2 per cent to at least 0.3 per cent. But with an increase in VAT to 20 per cent on the cards, a move that would cost each household £425 a year on average, any relief from this growth is likely to be short-lived.

Reasonable estimates suggest that a hike in VAT could cost 47,000 jobs and lead to the closure of almost 10,000 shops.

As ever, the question of when to cut is insignificant compared to that of how to rebalance the economy away from its overdependence on financial services. As things stand, there is little evidence that Osborne is adequate to the task.

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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.