Dodging the triple dip buys the Prime Minister valuable time

The news that the economy has growth faster than expected is welcome news for the Chancellor and Prime Minister Photo: PA Wire

Avoided. Averted. Escaped. Dodged.

There are many ways to describe it but the figures released this morning showing positive growth of 0.3 percent means Chancellor George Osborne has just avoided a third recession since 2008.

And the figure is better than most economists had predicted.

The consensus was for growth of 0.1 percent, so this is not only better but it gives the government a cushion for any future revisions.

GDP is often adjusted as more data comes in and had today's estimate been smaller it would have been more likely that a revision would push it back into negative territory. The Chancellor would then have been hit by the triple dip he dodged today.

But the Office for National Statistics, which collates the data, says revisions up or down tend to be by 0.1 or 0.2 percentage points.

GDP and main sectors since 2000 Credit: Office for National Statistics

Economically this result means very little. It still shows the economy is bumping along the bottom, essentially stuck close to zero.

Politically, however, it means much much more:

  • A triple dip is unprecedented. Who would want to be the only Chancellor to have presided over one?
  • A triple dip would have made the government narrative that much more challenging.
  • A triple dip would have sharpened Labour's attack on the government's austerity drive at a time when even the IMF has been raising concerns.
  • A triple dip would have made David Cameron's job that much harder, both with voters and with his own MPs who are increasingly starting to despair about their prospects at the next election in two years' time.
The Prime Minister visits a new factory for British digger manufacturer JCB in Brazil Credit: Stefan Rousseau/PA Archive/Press Association Images

There are still many questions for the government buried in the GDP estimate.

Why is the construction sector still contracting when the ministers are trying to boost it through infrastructure investment?

Why is the services sector still bailing out the rest of the economy when the Prime Minister has pledged to "rebalance" it in favour of manufacturing?

But these figures will help to calm Conservative MPs who had started to question whether they had the right man in charge. The reorganisation of the Number 10 policy unit will help with that too.

So if nothing else, the avoidance of the triple dip buys the Prime Minister and his Chancellor some valuable time.