Fears of 'voteless recovery' as ministers admit squeeze is not over

 

Ministers expressed cautious hopes yesterday that the economy has turned the corner but admitted doubts about the strength of the recovery after official figures showed Britain's double-dip recession has ended.

Gross domestic product rose by one per cent between July and September, the fastest growth for five years, helped by an "Olympic bounce" from ticket sales and a comparison with the extra bank holiday for the Queen's Diamond Jubilee celebrations in the previous quarter. In public, ministers spoke of a "healing economy" and admitted Britain still had a long way to go.

In private, they conceded some future statistics could be disappointing, making yesterday's figures "a dangerous moment" for the Government if great public expectations were raised. Some ministers admitted low growth is the best the Coalition can hope for until the 2015 election, fearing a "voteless recovery", because the squeeze on living standards will continue.

Such caution was justified when Ford announced 1,400 job losses and the closure of two UK sites. In another setback last night, David Cameron was rebuked by the statistics watchdog for appearing to pre-empt the GDP figures during Prime Minister's Questions on Wednesday, when he said "the good news is going to keep coming".

In a letter to the Prime Minister, Andrew Dilnot, chairman of the UK Statistics Authority, reminded him of a requirement not to disclose "any suggestion of the size or direction of any trend". Welcoming the official figures, Mr Cameron said: "There is still much to do, but these figures show we are on the right track, and our economy is healing."

George Osborne, the Chancellor, said Britain faced "many economic challenges at home and abroad". He added: "By continuing to take the tough decisions needed to deal with our debts and equip our economy for the global race we're in, this Government is laying the foundations for lasting prosperity." The figures will make it more difficult for Labour to repeat its claim that the longest double-dip recession since 1950 was "made in Downing Street".

Ed Balls, the shadow Chancellor, welcomed the figures but insisted "underlying growth remains weak". He said: "A one-off boost from the Olympics … is no substitute for a plan to secure the recovery Britain needs if we are to create jobs, get the deficit down and make people better off."

The Confederation of British Industry expressed fears that the recovery was largely confined to the London area. Director-general John Cridland said: "The global economic environment remains challenging."

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