This is the weakest possible recovery

Many forecasters now expect growth to be just 1.3 per cent in 2011, down from the original OBR forec

At the beginning of the week, the CBI lowered its UK forecast for 2012 from 1.7 per cent to 1.3 per cent and continues to expect a lacklustre 2.2 per cent in 2012, which contrasts with the Office for Budget Responsibility's (OBR) current forecast of 1.7 per cent (already down from the 2.6 per cent it forecast before the June 2010 Budget). The CBI's downgrade is not surprising, given the poor results from the CBI Industrial Trends Survey, which found for the first time in two years that optimism regarding the general business situation fell among UK manufacturers.

Then the National Institute of Economic and Social Research (NIESR) lowered its growth forecast to 1.3 per cent in 2011 and 2.0 per cent in 2012, with unemployment forecast to rise from 7.9 per cent in 2011 to 8.3 per cent in 2012. NIESR's latest forecast of growth of 1.3 per cent in 2011 is half the rate of growth (of 2.6 per cent) forecast by the OBR in June 2010, before George Osborne's first Budget. NIESR said: "[T]he public finances will not improve as quickly as the OBR expects. Weaker growth and, in particular, weak consumer spending, in the short term, are behind this. Public-sector borrowing will shrink by only 1 per cent of GDP in 2011-2012. The Chancellor will miss his primary target of balancing the cyclically adjusted current Budget by 2015-2016 by around 1 per cent of GDP. The Chancellor has time to address this and further consolidation should not be introduced now. Indeed, it remains our view that in the short-term fiscal policy is too tight and a modest loosening would improve prospects for output and employment with little or no negative effect on fiscal credibility."

Then there was that horrid CIPS/PMI reading for manufacturing, which signalled contraction in the sector for first time in two years in July, as new orders declined at the fastest rate since May 2009. The weaker performance of the sector impacted on the labour market, as manufacturers lowered employment for the first time in 16 months. At 49.1 in July, down from a revised 51.4 in June, the survey posted its weakest reading since June 2009. David Noble at the Chartered Institute of Purchasing and Supply argued: "Alarm bells are ringing or the UK manufacturing sector, which has seen conditions deteriorate rapidly since the start of the year."

At his Mansion House speech on 15 June 2011, Slasher claimed, "The British economy is recovering. Output is growing . . . Stability has returned. Britain is on the mend." It doesn't exactly look that way does it? A couple of months turns out to be a really long time in economics.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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Stability is essential to solve the pension problem

The new chancellor must ensure we have a period of stability for pension policymaking in order for everyone to acclimatise to a new era of personal responsibility in retirement, says 

There was a time when retirement seemed to take care of itself. It was normal to work, retire and then receive the state pension plus a company final salary pension, often a fairly generous figure, which also paid out to a spouse or partner on death.

That normality simply doesn’t exist for most people in 2016. There is much less certainty on what retirement looks like. The genesis of these experiences also starts much earlier. As final salary schemes fall out of favour, the UK is reaching a tipping point where savings in ‘defined contribution’ pension schemes become the most prevalent form of traditional retirement saving.

Saving for a ‘pension’ can mean a multitude of different things and the way your savings are organised can make a big difference to whether or not you are able to do what you planned in your later life – and also how your money is treated once you die.

George Osborne established a place for himself in the canon of personal savings policy through the introduction of ‘freedom and choice’ in pensions in 2015. This changed the rules dramatically, and gave pension income a level of public interest it had never seen before. Effectively the policymakers changed the rules, left the ring and took the ropes with them as we entered a new era of personal responsibility in retirement.

But what difference has that made? Have people changed their plans as a result, and what does 'normal' for retirement income look like now?

Old Mutual Wealth has just released. with YouGov, its third detailed survey of how people in the UK are planning their income needs in retirement. What is becoming clear is that 'normal' looks nothing like it did before. People have adjusted and are operating according to a new normal.

In the new normal, people are reliant on multiple sources of income in retirement, including actively using their home, as more people anticipate downsizing to provide some income. 24 per cent of future retirees have said they would consider releasing value from their home in one way or another.

In the new normal, working beyond your state pension age is no longer seen as drudgery. With increasing longevity, the appeal of keeping busy with work has grown. Almost one-third of future retirees are expecting work to provide some of their income in retirement, with just under half suggesting one of the reasons for doing so would be to maintain social interaction.

The new normal means less binary decision-making. Each choice an individual makes along the way becomes critical, and the answers themselves are less obvious. How do you best invest your savings? Where is the best place for a rainy day fund? How do you want to take income in the future and what happens to your assets when you die?

 An abundance of choices to provide answers to the above questions is good, but too much choice can paralyse decision-making. The new normal requires a plan earlier in life.

All the while, policymakers have continued to give people plenty of things to think about. In the past 12 months alone, the previous chancellor deliberated over whether – and how – to cut pension tax relief for higher earners. The ‘pensions-ISA’ system was mooted as the culmination of a project to hand savers complete control over their retirement savings, while also providing a welcome boost to Treasury coffers in the short term.

During her time as pensions minister, Baroness Altmann voiced her support for the current system of taxing pension income, rather than contributions, indicating a split between the DWP and HM Treasury on the matter. Baroness Altmann’s replacement at the DWP is Richard Harrington. It remains to be seen how much influence he will have and on what side of the camp he sits regarding taxing pensions.

Meanwhile, Philip Hammond has entered the Treasury while our new Prime Minister calls for greater unity. Following a tumultuous time for pensions, a change in tone towards greater unity and cross-department collaboration would be very welcome.

In order for everyone to acclimatise properly to the new normal, the new chancellor should commit to a return to a longer-term, strategic approach to pensions policymaking, enabling all parties, from regulators and providers to customers, to make decisions with confidence that the landscape will not continue to shift as fundamentally as it has in recent times.

Steven Levin is CEO of investment platforms at Old Mutual Wealth.

To view all of Old Mutual Wealth’s retirement reports, visit: products-and-investments/ pensions/pensions2015/