Budgetary Contradictions

Today's news that the economy had relatively soared back to growth the past quarter with a 1% increase to GDP was greeted with unsurprising jubilation by the government, relieved for an overdue exit from the double-dip recession. George Osborne in particular was unsurprisingly keen to crow that this was proof of the government's plan working. This was inevitable, but surprises me politically for three tactical reasons.

1. One summer doesn't a swallow make
The growth figures are good, but there are many anomalies that make attaching too large a rider to this growth risky. Coming off downturn in Q2 - in part 'attributed' to the additional bank holiday - analysts were predicting an upturn in any case by basis of comparison. There was also the one-off of all Olympics ticket sales over the last eighteen months, not to mention any additional trade gained from the Olympics over the summer. It wasn't normal, consistent growth and could easily become an outlier over a longer period - not what you want to be championing as your legacy.

2. It's now his problem
From the beginning of this government, Osborne has insisted that the problem was one he has inherited; he was setting in place strategies to deal with it. He has now claimed that the growth in the last quarter was due to his strategies - which, he would argue, are now clearly taking effect, as proved by this growth. This also couples him solidly to any future downturn or negative news, and makes it far harder to play the inherited problems card. The unusual nature of the Q3 growth and the underlying economic uncertainty also raise the horrifying spectre of a triple dip recession rising up under his watch.

3. It's growth, but from the wrong causes
However, if we ignore the comparison with the weak Q2 and set that to one side, the majority of the impact is from the Olympics; and here develops the greatest capacity for salutation of his growth to undermine his own arguments. Months of austerity have produced downturn and recession - whether directly or not, it's hard to ignore the correlation. Yet the sole major public funds investment in the government's lifetime - the Olympic games - results in economic growth across sectors. Far from validating the government's economic plan, these growth figures paradoxically contradict it - brought on by the very strategy which was castigated as indebting the country, while the economy has dipped and struggled alongside austerity politics. If the economy dips again from this high point, not unlikely, then suddenly the sole result of public spending corresponds with the sole economic growth point - which the government have now wedded themselves to in what will be a horribly fractious relationship.

If anything this underlines how weak and sensitive the government is placed on the economic front - to jump so eagerly at this good news that could so easily unravel at a later point. Only a perfect slope from here to the 2015 election could really guarantee that this over-enthusiastically embrace won't come back to haunt them, or at the very least cause discomfort. I don't think anyone can see that far ahead, but it's not unreasonable to be sceptical about the likelihood.

I know, I said I'd keep political blogs to Sundays only, but this was more relevant today. I may relax Sunday's theme instead this week as a compromise.