Chancellor George Osborne could still produce a “feel good factor” for the general election after official figures released this morning showed the UK economy grew last year by 2.6 per cent - the strongest annual rate of economic growth since before the banking crash.
Coming a day after figures showing the inflation rate was down to 0.3 per cent while wages rose by 2.1 per cent, the new figures released by the Office for National Statistics (ONS) will help Osborne and David Cameron refute Labour’s general election claim that families are suffering a cost-of-living squeeze.
The ONS said the improvement in economic outlook for businesses has fed through to an increase in employment of 103,000 jobs in the last quarter of 2014, taking the total in work to 30.9 million. Overall, 5.7 per cent are out of work, a fall of 486,000 year on year.
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Labour leader Ed Miliband and shadow chancellor Ed Balls continue to argue that the employment figures conceal the true extent of the pain felt by many working families where the breadwinner is on a zero-hours contract or – particularly among women – has only a low-paid part-time job.
As for growth, the ONS figures show the UK economy grew by 0.5 per cent in the final quarter of 2014, outstripping growth in the eurozone and resulting in a growth rate of 2.6 per cent for 2014 as a whole - the strongest calendar year rate of growth since 2007.
Growth would have been even more impressive if there had not been a 1.8 per cent slowdown in the construction industry. That is certain to lead to more pressure on Osborne and Cameron to announce further measures to stimulate the housing industry, which could become Osborne’s pre-election priority in his final pre-election Budget on 18 March.
In the shorter term, Tory backbenchers anxious about holding onto their jobs will be keen to see whether these encouraging growth and employment stats feed through to the opinion polls: apart from Monday’s ICM poll which gave the Tories a six-point jump, most other polls have refused to be moved by economic indicators.
