It may be too late to save the UK economy from recession

Today has seen a flood of bad economic news. The Autumn Statement may be too little, too late.

I am really hoping that one of these mornings I am going to wake up to some good economic news. But today was definitely not that day. The continuing flow of bad news on top of bad news is something we are all now becoming accustomed to.

I can only imagine how Vince and George feel every day when they open the economics and business pages of the newspapers. I did think it was time to try to be optimistic but I could find zero good news on the economics front; sorry. Neither Papendreou nor Berlusconi's resignations appear to have calmed the market's nerves.

Today started with an email from REC/KPMG's report on Jobs showing that the number of permanent placements had gone into negative territory. Recall that the latest labour market estimates from the ONS showed that employment had fallen over the last quarter by 178,000. So this is very bad news as it suggests that the labour market is headed downwards fast. Unemployment is set to rise again and there is every likelihood that youth unemployment will hit the million mark very soon.

No wonder there are thousands of youngsters on the streets of London, to this point protesting peacefully, about the government's lack of a credible higher education policy or any strategy to deal with rising youth unemployment.

But the bad news continued to flood in all morning. First there was the ONS publication of August's trade in goods deficit revised from £7.8bn to £8.6bn, but the deficit then widened further in September to £9.8bn - the biggest on record.

Second the CBI cut its growth forecast for 2011 to 0.9 per cent from 1.3, and for 2012 to 1.2 from 2.2 per cent, which is slightly more optimistic than NIESR's estimate yesterday of 0.8 and 0.9 per cent - recall that the OBR expects 2.6 per cent in 2011 and 2.8 per cent in 2012.

Third, the ICAEW/Grant Thornton Business Confidence Monitor showed business confidence has collapsed - companies are as gloomy about the outlook now as they were in the depths of the recession. The slump in sentiment pointed to a 0.2 per cent drop in GDP in Q42011.

And finally, we mustn't forget Italy - their 10 year bond yields were up 66bp at 7.37 per cent at noon today which is in bailout territory. Spanish yields were also up at 5.7 per cent. Greek yields are already over 25 per cent while 10 year Portuguese yields are over 11 per cent. This suggests the eurozone is heading into recession which hurts the UK economy which also now seems headed that way. Q42011 and Q12012 look likely to have negative GDP growth, which is consistent with a technical definition of a recession.

So the headwinds continue to gather. The Autumn Statement at the end of the month looks like it is going to be too little too late to prevent the UK economy going back into recession. I did warn them.

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

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Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.