THE pessimists thought it would be a train crash, but it was averted at the last moment. In the film thriller Unstoppable, the runaway freight locomotive screeches around the corner, just avoiding flying off the rails into a toxic depot.
And so it is with the apparently unstoppable UK economy. Just as it screeches to the edge of a double dip recession – toxic for the government – up pop the GDP figures. Growth is not runaway, but parts are doing well – manufacturing in particular. London too is on the up, with financial and business services growing at twice the national rate as the City returns to health.
But just like Denzel Washington, the steely-nerved train driver in the film, the chancellor knows he can’t afford to relax yet. Growth figures will mute critics of the government’s cuts, but it is still pretty shaky out there.
Many public sector job losses have still to come through, consumers are nervous, and sovereign debt crises are still roaming Europe. And economists worry about the return of the three-day week – this time imposed not by unions, but Royal nuptials.
The government’s push for growth must continue. The negative GDP figures announced in January had a transformative effect on ministers – the quest for growth trumped all other political considerations.
The government’s growth review and the ensuing budget contained a barrage of measures to get the financial juices flowing again.
The tax breaks to encourage venture capital investments will particularly help London, while the mayor also secured an enterprise zone in the Royal Docks. For our part, we have launched a new agency to promote London internationally to investors, visitors and students, and are on course to recruit over 20,000 apprenticeships this year.
Opponents of growth will use the GDP figures to say the government can let its guard down.
Those who want more regulation of business – or at least want to stop deregulation – will say we can all relax now. Those who wince at corporation tax cuts will say we need to cut no more. But we need to continue promoting growth – we are still behind where we were pre-recession, and youth unemployment is high.
There are lots of reasons to be optimistic – London remains a global powerhouse, well positioned for recovery. We retain our fundamental strengths of a highly skilled, highly productive economy, and are clearly on the path to recovery. But it’s too soon to put our feet up.
Anthony Browne is an adviser to the Mayor of London.