This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/commentisfree/2013/jul/25/economy-osbornes-moment-editorial

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Economy: Osborne's moment Economy: Osborne's moment
(2 months later)
It has become almost a tradition over the past three years for George Osborne to greet the latest GDP figures with an apology. Through quarter after quarter of contraction or flatlining, the chancellor has had to provide explanations and mitigation.It has become almost a tradition over the past three years for George Osborne to greet the latest GDP figures with an apology. Through quarter after quarter of contraction or flatlining, the chancellor has had to provide explanations and mitigation.
That was certainly not the case on Thursday. The news that national income had increased 0.6% over the last three months was all the excuse the chancellor needed to claim "Britain is now on the mend". The pace of growth has more than doubled from the first quarter of this year; Britain is now motoring along at its fastest clip since 2011. Everything from services to production to construction to agriculture is heading north. And going by the strength of business confidence, this uptick will continue into the autumn, too. After Mr Osborne's photogenic nightshift, Thursday must have felt like a victory lap.That was certainly not the case on Thursday. The news that national income had increased 0.6% over the last three months was all the excuse the chancellor needed to claim "Britain is now on the mend". The pace of growth has more than doubled from the first quarter of this year; Britain is now motoring along at its fastest clip since 2011. Everything from services to production to construction to agriculture is heading north. And going by the strength of business confidence, this uptick will continue into the autumn, too. After Mr Osborne's photogenic nightshift, Thursday must have felt like a victory lap.
Where did this growth come from? Three explanations suggest themselves. First, economies can't go south forever. At some point, businesses have to restock inventories, housesellers have to cut their losses, and so the wheel turns. Second, the £375bn pumped into the banking system along with ultra-low interest rates is finally having an impact on the real world. Or, finally, the £130bn punt on the housing market that is the government's Help to Buy is already having an impact. Quite possibly, all three are at work – along with a general sense of the global economic crisis having moved from its acute to chronic phase.Where did this growth come from? Three explanations suggest themselves. First, economies can't go south forever. At some point, businesses have to restock inventories, housesellers have to cut their losses, and so the wheel turns. Second, the £375bn pumped into the banking system along with ultra-low interest rates is finally having an impact on the real world. Or, finally, the £130bn punt on the housing market that is the government's Help to Buy is already having an impact. Quite possibly, all three are at work – along with a general sense of the global economic crisis having moved from its acute to chronic phase.
Let us assume for now that the days of impending recessionary relapse have turned to recovery. Economic historians of the future can debate the causes, but it must be obvious that this changes the terms of trade in Westminster. David Cameron will be able to claim at this September's party conference that the plan is working – even if rather later than hoped. This may well be his 1981 moment: the point at which all the naysayers can be dismissed as weirdy-beardy academics and media malcontents. It allows Nick Clegg to breathe easier. And it confirms that, of all the party leaders, Ed Miliband will face the toughest autumn conference of the lot. Labour's wobbly response to the GDP figures was surely a product of its uncertainty over whether to welcome the news or grouse that it should have been better.Let us assume for now that the days of impending recessionary relapse have turned to recovery. Economic historians of the future can debate the causes, but it must be obvious that this changes the terms of trade in Westminster. David Cameron will be able to claim at this September's party conference that the plan is working – even if rather later than hoped. This may well be his 1981 moment: the point at which all the naysayers can be dismissed as weirdy-beardy academics and media malcontents. It allows Nick Clegg to breathe easier. And it confirms that, of all the party leaders, Ed Miliband will face the toughest autumn conference of the lot. Labour's wobbly response to the GDP figures was surely a product of its uncertainty over whether to welcome the news or grouse that it should have been better.
For all those who want a more sustainable and just economy, there are plenty of important questions to raise about what kind of recovery Britain will have. Here are two points from Thursday's data. First, national income remains over 3% below where it was before the banking crisis, even while America and others have already made up all their lost output – and then some. Second, Britons are working as many hours as they were in 2008 – only they are now earning around 9% less in real terms. So the typical worker is working as hard as ever, but making far less money. That fact, and its possible ramifications, bear some thinking about. If Labour wants to have a substantial critique of Osbornomics, it will need to do a lot better than merely chant that austerity isn't working. It will need to show how it isn't working: how an entire, fragile economy is still being held together with the duct tape of cheap credit; how, for all the cuts, hundreds of billions of public money have been lavished on the banks; how none of the promises of rebalancing and righting a lopsided economy are even being made any more, let alone fulfilled. Most of all, any recovery marked by record numbers of food banks, zero-hours contracts and ever-growing inequality can only be termed subprime.For all those who want a more sustainable and just economy, there are plenty of important questions to raise about what kind of recovery Britain will have. Here are two points from Thursday's data. First, national income remains over 3% below where it was before the banking crisis, even while America and others have already made up all their lost output – and then some. Second, Britons are working as many hours as they were in 2008 – only they are now earning around 9% less in real terms. So the typical worker is working as hard as ever, but making far less money. That fact, and its possible ramifications, bear some thinking about. If Labour wants to have a substantial critique of Osbornomics, it will need to do a lot better than merely chant that austerity isn't working. It will need to show how it isn't working: how an entire, fragile economy is still being held together with the duct tape of cheap credit; how, for all the cuts, hundreds of billions of public money have been lavished on the banks; how none of the promises of rebalancing and righting a lopsided economy are even being made any more, let alone fulfilled. Most of all, any recovery marked by record numbers of food banks, zero-hours contracts and ever-growing inequality can only be termed subprime.
This is a nuanced analysis that will be tough to deliver accessibly, and the worry must be that Labour has not done sufficient groundwork to make it. But this debate is not for Westminster alone. It is relevant to some of those most cut off from the political conversation. Just asking whether this is a recovery was never enough. The pressing task now must be for the media and the rest of civil society to interrogate just what kind of recovery it is.This is a nuanced analysis that will be tough to deliver accessibly, and the worry must be that Labour has not done sufficient groundwork to make it. But this debate is not for Westminster alone. It is relevant to some of those most cut off from the political conversation. Just asking whether this is a recovery was never enough. The pressing task now must be for the media and the rest of civil society to interrogate just what kind of recovery it is.
Our editors' picks for the day's top news and commentary delivered to your inbox each morning.