Osborne should beware of a triple-dip recession

The government shouldn't assume that "the good news will keep coming".

One can hardly blame the government for seeking to convince voters that today's GDP figures prove that we're "on the right track". Growth of 1 per cent in the third quarter, the highest quarterly growth rate since 2007, is superficially impressive (the bounce back from the bank holiday added around 0.5 per cent, while Olympic ticket sales added 0.2 per cent) and makes it easier for George Osborne to argue that the economy is "healing".

But to borrow Cameron's phrase from yesterday, the government shouldn't assume "that the good news will keep coming". A significant number of economists believe it is possible or even probable that the economy will contract in quarter four (in what our economics editor David Blanchflower has called a "triple-dip recession"). A combination of further spending cuts, rising energy prices, and recession in the eurozone means that growth is likely to remain anaemic or non-existent.

Vicky Redwood of Capital Economics, for instance, said:

As the Olympic effects unwind, it is still possible that the economy contracts again in Q4. Indeed, the business surveys have been painting a slightly gloomier picture, suggesting that underlying output is still stagnating or even falling slightly.

Chris Williamson of the data provider Markit, said:

The government will most likely make the most out of this good news, but unfortunately it is unlikely that the UK will see such a strong performance again for some time. In reality, the danger is that this figure fuels a misguided belief that the economy is on the mend, when in fact there is plenty of evidence to suggest that momentum is being lost again.

There is a real risk that a return to contraction might be seen again in the fourth quarter.

The irony is that a slightly weaker figure in this quarter, by reducing the risk of a slump in Q4, might have suited the government more.

Balloons featuring images of George Osborne at the Conservative conference in Birmingham earlier this month. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Police shoot man in parliament

A man carrying what appeared to be a knife was shot by armed police after entering the parliamentary estate. 

From the window of the parliamentary Press Gallery, I have just seen police shoot a man who charged at officers while carrying what appeared to be a knife. A large crowd was seen fleeing from the man before he entered the parliamentary estate.

After several officers evaded him he was swiftly shot by armed police.

Ministers have been evacuated and journalists ordered to remain at their desks. 

More follows. Read Julia Rampen's news story here.

Armed police at the cordon outside Parliament on Wednesday afternoon. Photo: Getty

George Eaton is political editor of the New Statesman.