The news that Britain has avoided a disastrous triple-dip recession in the first quarter, with growth of 0.3%, brought welcome relief for the government.
The figures coming only a week after the coalition faced calls from the International Monetary Fund to relax its austerity programme, gave the chancellor breathing space to show his strategy for the economy was beginning to work.
On the plus side, there are signs that business confidence is gradually picking up; companies say export orders are improving as a result of a weaker pound and consumers appear to have more available money to spare after the large increase in their personal tax allowance this month.
The government can also draw some comfort from surveys suggesting the return to growth is no flash in the pan. The business confidence monitor jointly produced by the Institute of Chartered Accountants in England and Wales (ICAEW) and Grant Thornton, which went against the 0.1% consensus to predict growth of 0.4% in the first quarter, indicates that optimism for the April to June quarter is at its highest since late 2010.
Despite this unexpected lull in the doom and gloom of the current economic outlook, the chancellor will come under renewed attack over his growth strategy in the coming week, with one leading economist describing the Treasury’s investment plans as ‘chaotic’.
The highly influential London School of Economic Growth Commission will advocate a new approach to investment in Britain’s energy and transport networks. Government plans, it claims, are beset by ‘procrastination and instability’.
The criticism is badly timed for the government as it comes ahead of what is likely to be a damning report from the Commons Public Accounts Committee into the Government’s national infrastructure plan, which was launched in 2010 to oversee projects worth more than £300 billion.
A recent National Audit Report found ‘real risks to value for money’ under the plan because of policy uncertainty and failure to assess the costs to consumers.
The Growth Commission, a powerful body whose influential members include Sir Richard Lambeth, former director-general of the CBI, and Rachel Lomax, former deputy-governor of the Bank of England, releases its report this week in the National Institute Economic Review. It will say investment is being hampered by a ‘damaging cycle of institutional churn, political procrastination and policy instability’.
The report will clearly call for a national infrastructure body, independent of ministers, to oversee investment in roads and energy.
The chancellor is not out of the woods yet. The next few months will determine his fate. Meanwhile he is hanging on by his eyelashes. With an incubus of problems on the horizon, he desperately needs the luck of the devil which has so far eluded him.
Perhaps adversity will bring in its wake the wisdom and inspiration he is lacking at the moment; if you believe in miracles then there is still hope.