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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Theresa May knows she's talking nonsense - here's why she's doing it

The Prime Minister's argument increases the sense that this is a time to "lend" - in her words - the Tories your vote.

Good morning.  Angela Merkel and Theresa May are more similar politicians than people think, and that holds true for Brexit too. The German Chancellor gave a speech yesterday, and the message: Brexit means Brexit.

Of course, the emphasis is slightly different. When May says it, it's about reassuring the Brexit elite in SW1 that she isn't going to backslide, and anxious Remainers and soft Brexiteers in the country that it will work out okay in the end.

When Merkel says it, she's setting out what the EU wants and the reality of third country status outside the European Union.  She's also, as with May, tilting to her own party and public opinion in Germany, which thinks that the UK was an awkward partner in the EU and is being even more awkward in the manner of its leaving.

It's a measure of how poor the debate both during the referendum and its aftermath is that Merkel's bland statement of reality - "A third-party state - and that's what Britain will be - can't and won't be able to have the same rights, let alone a better position than a member of the European Union" - feels newsworthy.

In the short term, all this helps Theresa May. Her response - delivered to a carefully-selected audience of Leeds factory workers, the better to avoid awkward questions - that the EU is "ganging up" on Britain is ludicrous if you think about it. A bloc of nations acting in their own interest against their smaller partners - colour me surprised!

But in terms of what May wants out of this election - a massive majority that gives her carte blanche to implement her agenda and puts Labour out of contention for at least a decade - it's a great message. It increases the sense that this is a time to "lend" - in May's words - the Tories your vote. You may be unhappy about the referendum result, you may usually vote Labour - but on this occasion, what's needed is a one-off Tory vote to make Brexit a success.

May's message is silly if you pay any attention to how the EU works or indeed to the internal politics of the EU27. That doesn't mean it won't be effective.

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

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