GEORGE Osborne might have been spitting feathers but, looking at this week’s economic indicators, perhaps the Lords have done him a big favour in clipping his wings on the austerity front.

After the House of Lords votes that forced him to delay his planned £4.4 billion cut in annual tax credits, amid concerns about their huge impact on low-income working households, he criticised “unelected” Labour and Liberal Democrat peers for blocking the Government on a financial measure.

Mr Osborne’s planned slashing of tax credits constitutes a key plank of the further £12bn cut in annual welfare spending announced by the Chancellor in his so-called “stability” Budget in July, so it is hardly surprising he was annoyed.

Downing Street indicated in the immediate wake of the House of Lords votes that Prime Minister David Cameron would launch a “rapid review” into the constitutional fall-out of what was a major blow for Mr Osborne.

By a majority of 30, the Lords backed a motion put down by crossbench peer Baroness Meacher to delay the tax credit cuts until the Government responded to analysis of their impact by the Institute for Fiscal Studies, and considered “mitigating action”.

And peers also voted by 289 to 272 for a motion by former Labour minister Baroness Hollis to delay the cuts until the Government came forward with “full transitional protection” for those affected for at least three years.

The Chancellor will likely view the defeat in the House of Lords as his biggest setback this week. But what should surely be giving him most cause for concern is not the albeit great embarrassment of what occurred on Monday night but the confirmation this week that the UK’s belated and unbalanced economic recovery lost significant momentum in the third quarter.

Figures published by the Office for National Statistics (ONS) showed that the UK economy grew by only 0.5 per cent in the third quarter, with expansion having decelerated from 0.7 per cent in the previous three months.

The third-quarter growth, equivalent to an annualised pace of two per cent, is well adrift of the long-term average annual rate of expansion for the UK economy put at about 2.75 per cent by Bank of England Governor Mark Carney.

And the ONS figures showed that UK manufacturing output fell for a third consecutive quarter in the three months to September. So much for Mr Osborne’s vision of “a Britain carried aloft by the march of the makers”.

Meanwhile, Scottish Chambers of Commerce declared this week that the findings of its latest quarterly economic survey represented an “amber warning light” for the Scottish and UK Governments.

Scottish Chambers’ survey shows much weaker manufacturing growth, as well as declining confidence and employment in the key financial and business services sector. And it highlights the continuing impact of the oil and gas sector’s troubles on the broader economy north of the Border.

The survey shows growth in sales revenue and orders in the Scottish manufacturing sector slowed sharply between the second and third quarters. It also signals an overall fall in profits for manufacturers north of the Border.

And the Confederation of British Industry’s industrial trends survey, also published this week, revealed that Scottish manufacturers had suffered their sharpest quarterly fall in export order volumes since 1994 in the latest three months.

The report also showed a further fall in UK order volumes for the manufacturing sector north of the Border. And it signalled that overall output volumes for Scottish manufacturers were broadly flat in the three months to October.

Meanwhile, the CBI’s UK-wide industrial trends survey recorded the first decline in the manufacturing sector’s output in two years in the latest three months.

It is this sorry run of dismal economic statistics, rather than the commendable votes of the House of Lords, that should actually be annoying Mr Osborne, given that it is surely part of his job to help and not hinder the UK economy.

Experts, including those at Strathclyde University’s Fraser of Allander Institute, have spoken up in recent years to warn of the impact of welfare cuts on economic growth. However, it has appeared that Mr Osborne has either not been listening or does not want to hear.

Mr Osborne might have tuned out myriad warnings about the detrimental impact of his savage austerity programme on the UK economy but he cannot ignore the votes in the House of Lords.

Taking away billions of pounds every year in tax credits from those who have to spend all of this money to live, as well as being entirely unacceptable in terms of fuelling poverty, will hit the economy by sucking out demand, making things worse for most people.

Lamentably, Mr Osborne has signalled that, while he will heed the votes in the House of Lords, he is not for turning when it comes to his determination to slash welfare. He seems entirely unmoved by the raft of evidence suggesting the already struggling UK economy is in no shape to have more austerity heaped upon it.

Looking ahead to his Autumn Statement on November 25, Mr Osborne said: “I am determined to deliver that lower welfare, higher-wage economy that we were elected to deliver and the British people want to see.”

But surely what the British people would actually benefit from most is an economy achieving well-balanced sustainable growth, rather than what we have right now.

Rather than criticise the Lords, it would be great if Mr Osborne were able to grasp the possibility the votes could be a blessing in disguise. He could seize upon the situation as an opportunity to change tack in the face of the huge amount of evidence that his economic plan for Britain is not working.