This double-dip looks like a trade problem

Britain is importing more and exporting less, and that's where the recession stems from.

A lot of people – myself included  – were surprised by the economic contraction announced today. There had been lots of positive noises from the various surveys and data releases since the New Year, and the expectation was for positive (if meagre) growth. Retail spending has increased strongly in the new year, employment has picked up slightly, and the various surveys of businesses all suggested that the economy was growing slightly.

But there was one big problem: trade. It was export growth that propped up the UK economy during 2011 – without exports, the economy would have shrunk by 0.8 per cent over the year. However, UK exports slipped back at the start of 2012, and this may have been enough to tip the economy into recession.

Exports are key to the UK’s economic recovery, because conditions in the domestic economy are so strained. Consumer spending, which underpinned economic growth during the goods years, is being suppressed by falling incomes and stifling household debts. Add in the cuts in public spending, and the banks’ failure to lend money to the real economy, and it’s clear that the domestic economy is unlikely to lead us into recovery. Business investment, another potential route out of the crisis, is being crippled by a lack of confidence and weak demand. The UK economy is caught in a demand trap, and the only easy way out of it is to look overseas.

This export-led approach is at the heart of the government’s economic strategy. The government’s fiscal plan has enabled the Bank of England to keep interest rates low, and pump more money in through quantitative easing. These low interest rates have not been enough to boost consumer spending or investment, but they do have one very helpful side effect – they keep the pound weak, which boosts exports. In principle, this is a decent strategy, but the latest figures suggest it may be unravelling.

The latest ONS trade stats show that the UK’s trade deficit worsened dramatically in January and February, after having improved through 2011. Rather than helping to prop up the economy, trade has started to act as a drag this year, as imports grow and exports shrink. As a result, some of the contraction in the economy came mostly from the production sector, which tends to export more. And perhaps this trade problem shouldn’t come as a surprise, because the pound has been steadily appreciating over recent months. This makes exports more expensive, and imports cheaper – and suggests that the government’s efforts to keep the pound weak are no longer working.

This trade problem may also help to explain how the economy could shrink if retail sales grew. As it turns out, an awful lot of what we buy in the shops is imported, whether its clothes from East Asia or cars from Germany. If the increase in retail spending has helped fuel a rise in imports (or if the imports, such as petrol, have become more expensive), this will not help the economy grow. That isn’t just bad in the short term – it suggests our economy is heading in the wrong direction altogether, and certainly not re-balancing. We will have to hope that this trade problem turns itself around, or it will be even harder to get out of the economic slump.

There is one more point to address: the biggest factor in the GDP contraction was construction. But this should surprise no-one – we already knew that domestic spending was going to be weak, that the government is cutting back investment, and that there are questions over how reliable construction figures are anyway. The problem is that, up until now, these domestic weaknesses have been compensated for by export growth. If that stops being the case, the economy could be in even more trouble, and there will be even more onus on the government to come up with another economic strategy.

Cranes help build the Bishopsgate Tower in London, but construction has fallen flat nationwide. Photograph: Getty Images

Andrew Sissons is a researcher at the Big Innovation Centre based at the Work Foundation.

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I could have sworn that the Lincoln City striker was my dustman...

Watching a game on tenterhooks to see if the manager picks his nose.

Too busy thinking about other things, so didn’t at first realise that I was witnessing possibly the greatest event in the history of civilisation. Or since 1863, when the FA was formed.

I had tuned in to watch Burnley v Lincoln City for the pleasure of seeing if the former’s manager, Sean Dyche, is ever going to pick his nose in public. His hand goes up to his nose every 30 seconds, gives it a rub, then when he’s about to start poking around inside, he thinks better of it, only to start again a minute later. He clearly can’t help it – it’s a nervous tic, which all managers have, though some hide it better.

Then I started studying the Lincoln team, none of whose phizogs, mannerisms or walks I know. By this stage in the season, I am pretty familiar with every regular Premier player, having grown accustomed to his face, his smile, his ups and downs. When it’s a Cup match with a team from a lower division, in this case a non-League team, the players are strangers. I would not recognise any of them in my porridge.

Then I saw someone I swore was our dustman, large and beefy, with Bobby Charlton hair. I thought he must have wandered on to the pitch from the burger bar – but, no, he was a Lincoln forward, the 16-stone Matt Rhead. Even on the couch, cradling my Beaujolais, I could hear Burnley fans shouting, “You fat bastard.”

Lincoln’s captain was called Waterfall, another player I hadn’t come across before, one of those footballers who spend their whole life in the lower divisions, becoming local legends, if they last long enough, but completely unrecognised elsewhere.

I googled his first name, and oh, my God, it’s only Luke. Luke Waterfall, how romantic is that? Straight out of Mills & Boon. Did he assume that name when he went into show business, Lincoln City Division?

I started thinking of all the fab new names in football, a source of endless reverie when the game is dull. I’m allowed to do this when watching on my own. When watching with my son or anyone else, I impose house rules, which state that all conversation must be linked directly to what is happening on the screen.

Jesus at Man City, what a gift from, er, God for the headline writers. He arrived in January for £27m, a bargain already, especially if he continues to work miracles, har, har. It says “Jesus” on the back of his shirt. His first name is Gabriel, after the archangel, presumably. The sub-editors will have fun with him for years – “Jesus saves”, “Jesus wept”.

I remember waiting in the 1970s when the Scottish player Gerry Queen joined Crystal Palace. I knew that events would turn him into a headline. Then he got a red card: “Queen sent off at Palace”.

The all-time classic football headline was used in February 2000, when Inverness Caledonian Thistle beat Celtic 3-1. The result, one of the biggest upsets in Scottish football, led to the Sun headline

Super Caley go ballistic

Celtic are atrocious

In a lifetime of subbing, you don’t get many occasions when all the planets align so exactly.

The new names that I’ve been enjoying this season include Dunk at Brighton. Haven’t noticed him walking into a headline yet, and I can’t imagine what it will be – something to do with “Dunking donuts”, or “Dunk and disorderly”?

I’ve always liked Robert Snodgrass, now at West Ham. His name sounds so Dickensian. And Southampton’s Virgil van Dijk – wow, my Hollywood hero. Harry Winks at Spurs: what a shame he wasn’t given shirt number 40. When Jeffrey Schlupp appeared in the Leicester line-up last season, I couldn’t wait to decide if his name would fit a verb, a noun, a term of abuse, or a form of semi-sleeping, such as the way I schlupped on the sofa watching Burnley v Lincoln.

Then, blow me, I was wakened violently from my reveries. Just before the end, Lincoln scored – making them the first non-League team to reach the FA Cup quarter-finals in 103 years. And I was watching, sort of . . . 

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 24 February 2017 issue of the New Statesman, The world after Brexit