How did the main protagonists do

The big political story of the week was the shock economic growth figures. The initial estimate for Q4 2010 was that the economy shrank by 0.5%. This was much worse than anyone expected. The political reaction was fascinating. Now that the dust has settled, how do we think the parties handled the surprise and what are the implications for the future?

George Osborne blamed the weather. A political slight of hand designed to buy him time. He needs breathing space, because there is real uncertainty about what is going on. Whilst the chancellor is technically correct to point out the costs of snow, the underlining figures were a puzzle. The government estimated that with sunnier skies, the economy would have stood still; a terrible result for a country emerging from recession. Are things really that bad or are the figures incorrect?

The chancellor has three months to understand what is happening and if necessary formulate a response. It won’t be easy since he has bet all his political capital on the cuts agenda. So it is understandable that he wanted to buy time. Work might already be underway in the Treasury on a plan B; it is interesting to note that tax cuts are increasingly mentioned in the press.

Meanwhile the shock figures meant, for the first time since the election, Labour was listened to on the economy. It was a timely opportunity for the new Shadow Chancellor to make an impact and he handled it with restraint. He fully accepted the impact of the weather and was relatively upbeat, suggesting that a double dip recession was unlikely.

The shadow chancellor had little choice but to strike a low-key, positive tone. Labour’s economic reputation is so damaged it cannot yet say “I told you so” or risk crying wolf. It was progress for Labour to be heard at all. And so long as Labour’s own economic policy is unclear; the party is not in a position to sustain a robust attack on the government.

All eyes will be on next quarter’s results. For now a recession is technically unlikely, but ironically that could change if the 2010 Q4 figures are revised up. A forced policy u-turn would obviously reduce confidence in the Tories. The Lib Dems urgently need an economic spokesman to replace Vince Cable. And now that the public are listening, Labour needs to clarify its economic message and work hard to earn public trust.

One final point, whilst Osborne cited the weather as an excuse for poor figures, isn’t it time the UK functioned better in the snow? Other countries grew despite the record low temperatures. Are not these figures a wake up call about our infrastructure? If it costs us so much every time it snows, it would surely be a sound investment to make the UK more resilient. We should aim to grow whatever the weather.

Jonathan is Labour activist in West Sussex and a regular PB contributor