revealed that Britain's economy has grown 0.5% in the the first three months, with businesses and finance increasing by 1%. It's good that it the economy is growing and not shrinking, and it shows that Ed Balls has so far been incorrect to predict a double-dip recession. The Prime Minister has rightly been rubbing this in Labour's face at PMQs, especially as it is significantly better than anything Labour was producing in their last few years in office. Also, it is genuine growth, not Labour's artificial growth from increased government spending of money we don't have.
However, it's important not to get too cocky. 0.5% growth is growth...just. Balls has a point when he says that the economy has stagnated in the last 6 months - it has. It would have been a hell of a lot worse has Labour been allowed to keep spending and to hike taxes even more, but let's be honest - this is not what Cameron and Osborne would have hoped for when they got into office a year ago.
2011 is critical for the Tories. We have a decent last three months economically under the belt as we head into local elections. The rest of the year is crucial. If the Coalition can stave off double dip, and get the economy back on its feet with more growth, then Labour are utterly screwed, and it bodes well for future elections. However, should the economy double-dip, then Labour will be given the opportunity to blame the Coalition for not doing the right thing on the economy (despite the fact that Labour would have made it worse) and will be able to declare that Keynesian economics would have worked - even though it wouldn't.
I've said it before and I'll say it again - the Coalition is doing the right thing re: spending cuts. Yet if it wants sustained growth in the long-term, it needs tax cuts for all. It is the ridiculous tax burden that is stagnating the economy, not the spending cuts. Despite the protestations of the left that "tax cuts for the rich" are awful etc, and the political furore that will result from the economically ignorant, significant tax cuts for small and large business owners will make the economy boom; it will increase tax revenue and it will decrease unemployment. They are so close to being successful on this, but if they don't get the guts to slash taxes, the economy won't get back on its feet, we may face a double-dip, and that will hand Labour a massive victory.
I'm calling it now, if there are no proper tax cuts within twelve months - the next national election will go to Labour.