Strong US growth raises the bar for Osborne

Osborne may soon no longer be able to boast that the UK is doing better than the US.

One of George Osborne's favourite boasts is that the UK economy has grown by more than the US economy this year. He consistently cites this fact as proof that austerity, not stimulus, is the way to grow the economy. This passage, from an Osborne op-ed for the Telegraph in August, is typical:

The US economy has grown more slowly than the UK economy so far this year, despite fiscal stimulus in the former and fiscal consolidation in the latter, showing that the problem is not too much fiscal responsibility.

His basic claim is not wrong. In the first two quarters of this year, the US economy grew by 0.3 per cent (0.1 per cent in Q1 and 0.2 per cent in Q2), while the UK economy grew by 0.5 per cent (0.4 per cent in Q1 and 0.1 per cent in Q2). (Although, of course, the UK economy shrunk by 0.5 per cent in the fourth quarter of 2010, while the US economy grew by 0.6 per cent.) But today's better-than-expected US growth figures have raised the bar for Osborne. In the third quarter, the US economy grew by a relatively impressive 0.6 per cent (or an annual rate of 2.5 per cent).

It's a figure that few economists expect the UK to match when the Q3 GDP figures are published on Tuesday. Growth in the second quarter was recently revised down by the ONS to just 0.1 per cent and the Q3 figure is unlikely to be much better.

The challenge is clear. Unless the Q3 growth figure is at least 0.5 per cent, Osborne will no longer be able to boast that the UK has grown by more than the US this year.

George Eaton is political editor of the New Statesman.

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Who will win in Manchester Gorton?

Will Labour lose in Manchester Gorton?

The death of Gerald Kaufman will trigger a by-election in his Manchester Gorton seat, which has been Labour-held since 1935.

Coming so soon after the disappointing results in Copeland – where the seat was lost to the Tories – and Stoke – where the party lost vote share – some overly excitable commentators are talking up the possibility of an upset in the Manchester seat.

But Gorton is very different to Stoke-on-Trent and to Copeland. The Labour lead is 56 points, compared to 16.5 points in Stoke-on-Trent and 6.5 points in Copeland. (As I’ve written before and will doubtless write again, it’s much more instructive to talk about vote share rather than vote numbers in British elections. Most of the country tends to vote in the same way even if they vote at different volumes.)

That 47 per cent of the seat's residents come from a non-white background and that the Labour party holds every council seat in the constituency only adds to the party's strong position here. 

But that doesn’t mean that there is no interest to be had in the contest at all. That the seat voted heavily to remain in the European Union – around 65 per cent according to Chris Hanretty’s estimates – will provide a glimmer of hope to the Liberal Democrats that they can finish a strong second, as they did consistently from 1992 to 2010, before slumping to fifth in 2015.

How they do in second place will inform how jittery Labour MPs with smaller majorities and a history of Liberal Democrat activity are about Labour’s embrace of Brexit.

They also have a narrow chance of becoming competitive should Labour’s selection turn acrimonious. The seat has been in special measures since 2004, which means the selection will be run by the party’s national executive committee, though several local candidates are tipped to run, with Afzal Khan,  a local MEP, and Julie Reid, a local councillor, both expected to run for the vacant seats.

It’s highly unlikely but if the selection occurs in a way that irritates the local party or provokes serious local in-fighting, you can just about see how the Liberal Democrats give everyone a surprise. But it’s about as likely as the United States men landing on Mars any time soon – plausible, but far-fetched. 

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