Relief for Osborne on rare day of good news

George Osborne received a double helping of good news yesterday: better-than-expected figures on the strength of the recovery and an upgrade from the credit-ratings agency Standard & Poor.

The latter changed its outlook for the British economy from “negative” to “stable”. That will be especially comforting for the Chancellor as he has put restoring international investors’ confidence at the centre of his strategy of deficit reduction and cuts. It also means the possibility of Britain’s undergoing a Greek-style sovereign-debt crisis is becoming more remote.

Senior ministers were delighted by the vote of confidence and the growth figures, which were at the top end of their private expectations. Despite last week’s announcement of severe spending cuts, ministers believe the recovery will be sustained into the fourth quarter of the year and beyond, albeit possibly at a lower rate.

One Treasury source said: “We are absolutely not complacent, but it further underlines that confidence is returning to the economy, leading to a strong recovery.”

Mr Osborne told the Cabinet yesterday that the world economy remained “relatively choppy” but there were grounds for optimism that a recovery was underway. Ministers discussed plans to focus on all areas of public spending to ensure the focus was on fostering growth through removing unnecessary bureaucracy.

Underlining the message, Philip Hammond, the Secretary of State for Transport, gave the green light to 16 road and transport schemes which he told MPs would “provide a vital economic boost”. The projects include upgrades to the M1, M6 and M25.

Standard & Poor said the Coalition Government had "shown a high degree of cohesion in putting the UK's public finances on to what we view to be a more sustainable footing.

“The policy objective to close the fiscal gap further underpins the ratings. We believe that the completion of the government's Spending Review reduces uncertainties about its political resolve to tackle the challenges resulting from the structural deterioration in public finances.”

Mr Osborne welcomed the news: “Today’s figures show the economy continuing to grow, at double the rate the market expected and the fastest rate for the third quarter since 1999.”

The surprising momentum of the recovery will also reduce risks to Mr Osborne’s strategy. If the double dip is not severe, and unemployment doesn’t rise as much as feared, then tax revenues will be healthier and the bill for benefits lower, implying Mr Osborne is more likely to hit his targets for government borrowing. The Office for National Statistics said yesterday that the economy expanded by 0.8 per cent in the three months to September, about double the pace estimated by City forecasters. The Bank of England will also be able to defer any resumption of its “quantitative easing” programme, although most economist expect the economy to weaken next year as the spending cuts and tax hikes bite – epically after the rise in VAT to 20 per cent in January.

The good economic news for the Government leaves the opposition in a potentially awkward position, as they have staked much on the failure of the Government's policies and this leaves them with the task of explaining away encouraging data, at least for the time being. The shadow Chancellor, Alan Johnson commented: “Momentum remains from Labour's support for the economy - especially the construction sector. The risk going forward is that the Government has a plan to cut one million jobs, but no plan to support the private sector in replacing them.

“Yes the deficit needs to be reduced - but it needs to be at a pace that the private sector can manage.”

Sport
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Voices
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
Sport
world cup 2014
Sport
Ray Whelan was arrested earlier this week
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
film
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
books
News
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
News
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
News
Mick Jagger performing at Glastonbury
people
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
Sport
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
News
business
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

E-Commerce Developer

£45000 - £60000 per annum + competitive: Progressive Recruitment: Exciting opp...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice