Chancellor makes cautious prediction before Wednesday's publication of official statistics for economic growth in the first three months of 2011
The chancellor, George Osborne, has told the cabinet that the economy is on the right track ahead of Wednesday's first-quarter official growth figures, a key test of how fast the economy has recovered since its shock 0.5% contraction in the last quarter of 2010.
But Osborne said the underlying position remained difficult in what looks like a cautious prediction ahead of the official statistics.
The cabinet meeting was the first to be held since serious infighting broke out between Liberal Democrat and Conservative members of the coalition over the way in which the no campaign is conducting its battle to convince voters to reject a switch to the alternative vote in the 5 May referendum.
Chris Huhne, the energy secretary and one of the most vociferous critics of the no campaign tactics, was absent from the Tuesday morning meeting, attending a meeting in Brussels.
Huhne has spoken of taking legal action against the no campaign and described some of the Conservative chairwomen's remarks to those of the Nazi propagandist Joseph Goebbels.
But the prime minister's spokesman claimed there was some good-natured banter on the margins of the cabinet.
David Cameron apparently made no reference to the in-fighting and did not call for a return to collective cabinet responsibility. Both he and the deputy prime minister, Nick Clegg, are trying to manage a difficult fortnight in the hope that once the local elections and the referendum are over the two sides will return in part to their previous relatively warm relations.
Vince Cable, the business secretary, last week called for the British people to vote yes in order to usher in a progressive century that would see the Conservatives beaten.
On Tuesday he confined his remarks to the coalition's growth strategy. The Office for Budget Responsibility, the independent fiscal watchdog, said in the March budget that gross domestic product (GDP) will rise just 1.7% this year, rather than the 2.1% it predicted in November ? already a downwards revision from the previous budget.
Another 0.1% was cut off its the prediction for 2012, now down to 2.5%.
Osborne has 24 hours advance access to key economic data such as the preliminary estimate of first-quarter GDP due to be released at 0830 GMT on Wednesday. The tone of his remarks will either be seen as expectation management, or a reflection of the still choppy economic picture.
Economists polled by Reuters have steadily downgraded their expectations for the first quarter, which is expected to show quarterly growth of just 0.5%.
Osborne reported back to cabinet colleagues on the IMF spring meeting at which the IMF also revised down its 2011 forecast for the UK to 1.75%, its third downgrade in a year.
The revision reflects the front-loading of the cuts praised by the IMF. The prime minister's spokesman said: "We are trying to rebalance the economy. That is always going to be difficult."
The cabinet was also given an update of the Nato operations in Libya, where the foreign secretary, William Hague, said progress was being made, but the UK was in there for the long haul.
Source: http://www.guardian.co.uk/politics/2011/apr/26/economy-on-right-track-george-osborne-gdp
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