In the absence of any unforseen hitches, David Cameron will finally deliver his long-delayed speech on Britain’s relationship with the EU this week. It won’t be today, the day of Barack Obama’s second inauguration, or tomorrow, when thousands of French and German politicians and diplomats will gather in Berlin to celebrate the 50th anniversary of the signing of the Elysée Treaty (also known as the Treaty of Friendship) between the two countries, or at the end of the week, when Cameron travels to Davos for the 2013 World Economic Forum, leaving Wednesday as the most likely date for the address.
When Cameron gives his speech, promising that a Conservative government would seek to repatriate powers from Brussels before holding a referendum on the outcome (offering voters a choice between what Cameron calls a “new settlement” and withdrawal), he will hope, among other things, for a bounce in the polls. The last time that the Tories enjoyed a sustained lead over Labour was in December 2011 after Cameron’s EU “veto”. With reports of Conservative MPs reacquiring their taste for regicide, the PM is keen to show that there are things he can do to improve his party’s dismal chances of victory at the next election.
But his speech risks being overshadowed by the other big event of the week: the release of the first estimate of UK quarter four GDP on Friday. After growth of 0.9 per cent in the third quarter, artifically inflated by the inclusion of the Olympic ticket sales and the bounce-back from the extra bank holiday in June, forecasters almost universally expect a negative figure. The government’s own forecaster, the Office for Budget Responsibility, predicts that the economy shrunk by 0.1 per cent, while the National Institute of Economic and Social Research expects a contraction of 0.3 per cent.
A contraction in quarter four wouldn’t represent an unprecedented “triple-dip recession” (that would require two successive quarters of negative growth), it would make it significantly harder for Cameron to claim that the economy is “healing” and embolden Labour to go on the attack. If the economy is shown to have shrunk in Q4, four of the last five quarters will have been negative.
We know from the pre-released extracts of Cameron’s speech that the Prime Minister intends to bemoan the EU’s “crisis of competitiveness”. But if the UK economy, which has performed worse than almost any other in Europe, is shown to have shrunk again, his lecture could soon look ill-advised.