GDP figures offer little relief for Osborne

Growth of 0.5 per cent in Q3 was less than half of what Osborne needed to meet the OBR's forecasts.

The number crunchers at the ONS have just announced that the economy grew by 0.5 per cent in the third quarter, a better-than-expected figure but still a sluggish one. In the last 12 months, the economy has grown by just 0.5 (-0.5 per cent in Q4, 0.4 per cent in Q1, 0.1 per cent in Q2 and 0.5 per cent in Q3) and Osborne has no hope of meeting the OBR's forecast for 2011 growth (1.7 per cent), with deleterious consequences for his borrowing targets. Over the same period, the US grew by 1.6 per cent. Britain is still in the growth slow lane.

In political terms, today's figures will change little. George Osborne will continue to stand by his deficit reduction plan and Labour will (rightly) continue to argue that the government is cutting "too far, too fast". In the last year, 240,000 public-sector jobs have been lost and 264,000 private-sector jobs have been created, a net increase of just 24,000. Worse, the Chartered Institute of Personnel and Development has predicted that 610,000 public-sector jobs will be lost by 2016, 210,000 more than forecast by the Office for Budget Responsibility.

Attention will now move swiftly to 29 November and the Chancellor's autumn statement (the equivalent of the old pre-Budget report). In some respects, the government has already adopted a plan B in the form of credit easing, accelerated deregulation and more quantitative easing by the Bank of England (described by Osborne in 2009 as "the last resort of desperate governments when all other policies have failed"). The question remains whether it will change course again by temporarily slowing the cuts or offering further fiscal stimulus (a plan C, if you like). Today's figure was not bad enough to force a change of direction but nor was it good enough to offer any hope that Osborne will meet his deficit reduction targets. The government has already been forced to announce £44.5bn of extra borrowing due to lower growth and higher unemployment. Expect Osborne to announce billions more when he delivers his statement later this month.

And there's every reason to fear that the fourth quarter will be worse. The most recent Bank of England minutes revealed that the Monetary Policy Committee believes growth will be close to zero in the final three months of the year. But so managed have our expectations become that some growth, any growth will be welcomed.

George Eaton is political editor of the New Statesman.

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The big problem for the NHS? Local government cuts

Even a U-Turn on planned cuts to the service itself will still leave the NHS under heavy pressure. 

38Degrees has uncovered a series of grisly plans for the NHS over the coming years. Among the highlights: severe cuts to frontline services at the Midland Metropolitan Hospital, including but limited to the closure of its Accident and Emergency department. Elsewhere, one of three hospitals in Leicester, Leicestershire and Rutland are to be shuttered, while there will be cuts to acute services in Suffolk and North East Essex.

These cuts come despite an additional £8bn annual cash injection into the NHS, characterised as the bare minimum needed by Simon Stevens, the head of NHS England.

The cuts are outlined in draft sustainability and transformation plans (STP) that will be approved in October before kicking off a period of wider consultation.

The problem for the NHS is twofold: although its funding remains ringfenced, healthcare inflation means that in reality, the health service requires above-inflation increases to stand still. But the second, bigger problem aren’t cuts to the NHS but to the rest of government spending, particularly local government cuts.

That has seen more pressure on hospital beds as outpatients who require further non-emergency care have nowhere to go, increasing lifestyle problems as cash-strapped councils either close or increase prices at subsidised local authority gyms, build on green space to make the best out of Britain’s booming property market, and cut other corners to manage the growing backlog of devolved cuts.

All of which means even a bigger supply of cash for the NHS than the £8bn promised at the last election – even the bonanza pledged by Vote Leave in the referendum, in fact – will still find itself disappearing down the cracks left by cuts elsewhere. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.