Good news for the chancellor

As suggested on this blog yesterday, Britain has not slipped back into recession—there is no triple dip. The Office for National Statistics released its figures this morning at 9:30, revealing that economic output in the first quarter of the year was 0.3 per cent.

In any other circumstances, this would be regarded as measly, barely growth at all. If the Chinese were to release similar figures, it would signify severe economic crisis.

But for Britain and for George Osborne, 0.3 per cent counts as good news. Anything other than a positive number from the ONS this morning, and he would have faced a ferocious attack from all sides. Labour would have said that his austerity programme was too much too soon, a view also expressed last week by senior officials at the IMF. On his own side, the more hawkish members of the Conservative party would have accused him of not getting the national debt under control.

But those dangers have now passed. This morning's feeble growth figures have given the chancellor a breathing space—a narrow one but space all the same.

And there was more good news for the chancellor with the announcement that Jo Johnson, the brother of the somewhat more high-profile Boris, has been made head of No 10's policy unit. His job is, in effect, to write the Conservative party's next election manifesto.

Johnson jnr is a contemporary and friend of the chancellor. It was Osborne who encouraged him to join the Conservative party before the last election.

But Conservatives are somewhat nonplussed by the decision, one even likening Johnson's meteoric rise to that of Ed Miliband. A technocrat, Johnson made his reputation writing crisp contributions to the Financial Times's Lex column—but his policy ideas are unknown and, as something of an arriviste, Johnson has no real connections with the Tory back benches.

It is suggested that in appointing a loyalist to such a core position, Osborne and Cameron are not so much reaching out to the party, but building a more defensive, party-line team within Downing Street—the appointment this week of Jesse Norman, a loyal Cameroon, to a top policy position would seem to confirm this view.

Despite today's economic fillip, the Conservative leadership faces a tough summer. If there is a poor showing at the forthcoming local elections, rumblings about a leadership challenge may grow, although MPs are quick to play down the likelihood of this. There is also the possibility of a general strike, the gathering threat of UKIP and continuing economic stagnation, all of which are playing on Conservative minds. If Cameron and Osborne are faced by such challenges, then they will need more than just loyalists by their side.