Testing times: Economy improves but public wary of cuts
By Ian Dunt
GDP figures released today showed a sharper-than-expected rise in the UK’s economic performance, despite polls showing public concern about the deficit reduction plan.
The economy grew at 0.8% in the third quarter of the year – the highest growth between July and September for ten years.
The figure was down from 1.2% in the second quarter but analysts expected a drop off once government stimulus and a surge in the construction sector had stopped playing a role.
Cabinet boosted by economic growth
GDP figures: Political analysis
The chancellor was treated to a double dose of good news, when Standard & Poor held the top AAA credit rating for Britain today and upgraded its outlook to stable from negative.
“In our opinion, the decisions reached by the UK coalition government in its 2010 spending review reduce risks to the government’s implementation of its June 2010 fiscal consolidation program,” S&P said in a statement.
“Moreover, the coalition parties have shown a high degree of cohesion in putting the UK’s public finances onto what we view to be a more sustainable footing.”
The improved economic performance could help soothe public jitters over the nature of the deficit reduction plan, which are picking up momentum.
Two new polls released today show heightened unease about George Osborne’s austerity drive.
Public opinion shifting against cuts
Labour’s electoral performance is improving, according to the polls, although a leaked internal document seen by the Times suggests the party is wary of its own economic policy.
The nature of reform to the banking sector is also under the spotlight, with Bank of England governor Mervyn King admitting to a New York audience last night that the new rules laid out by the Basel III banking reforms are not sufficient to prevent another crisis.
