Lost year, or lost decade?

Growth will flatline over the next year, but already things are back where they were in 2002.

I wrote yesterday that it doesn't really matter that the UK is in a technical recession. The zero boundary is unimportant in many aspects of economics, and growth is one – the difference between -0.1 per cent and 0.1 per cent is the same as the difference between 0.1 per cent and 0.3 per cent.

But when economics feeds into politics and the media, the difference does matter. Headlines of "UK not in recession" are far more likely in the event of 0.1 per cent growth than headlines of "UK remains in crippling stagnation"; similarly, the news yesterday was always going to be about the two consectutive quarters of negative growth, not the seven consecutive quarters in which the UK economy has barely changed. Headlines affect how people think, how people think affects how they act, and how they act feeds back into the economy.

All of which is to say that if it didn't matter that we were in a technical recession when the stats were released at 9:30am yesterday, it probably did by the time the front pages were fixed at 9:30pm.

Gerard Lyons, Standard Chartered's chief economist, said:

The likelihood is that the data will further dent confidence and push the recovery back.

The second quarter of 2012 was always going to be a weak one. The OBR, which overestimated Q4 2011 growth by 0.1 per cent and Q1 2012 by 0.5 per cent, predicts a flatlining Q2 2012, with 0.0 per cent growth. If their past pattern continues, we should expect a third quarter of contraction - especially as consumer confidence, hit by the news of recession, will depress that quarter still furter.

Little wonder that Philip Aldrick, the Telegraph's economics editor, is calling this a "lost year", fearing that the overall contraction in 2012 could be 0.1 per cent. But even there, talk of a lost year glosses over the longer term weaknesses. Nominally positive growth below the rate of population growth results in GDP per capita contracting. Even if we find out, after the final GDP figures come out in two months, that we weren't in a national recession, we've been in a per capita recession for a while. And under OBR and ONS predictions for the rate of GDP and population growth, it won't be until 2016 that GDP per capita is back to where it was in 2007. That isn't a lost year; it's a lost decade.

And even talk of a lost decade is understating the problem. Pay rises have been near at or below inflation for so long that the average weekly wage now is worth the same as it was in September of 2002 – and because price inflation remains higher than wage inflation, this is getting worse, not better. In terms of what you can buy for your wage, we've already lost a decade. The trick will be to not lose two.

Buckingham Palace during the Golden Jubiliee, the last time real wages were this low.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Appreciate the full horror of Nigel Farage's pro-Trump speech

The former Ukip leader has appeared at a Donald Trump rally. It went exactly as you would expect.

It is with a heavy heart that I must announce Nigel Farage is at it again.

The on-again, off-again Ukip leader and current Member of the European Parliament has appeared at a Donald Trump rally to lend his support to the presidential candidate.

It was, predictably, distressing.

Farage started by telling his American audience why they, like he, should be positive.

"I come to you from the United Kingdom"

Okay, good start. Undeniably true.

"– with a message of hope –

Again, probably quite true.

Image: Clearly hopeful (Wikipedia Screenshot)

– and optimism.”

Ah.

Image: Nigel Farage in front of a poster showing immigrants who are definitely not European (Getty)

He continues: “If the little people, if the real people–”

Wait, what?

Why is Trump nodding sagely at this?

The little people?

Image: It's a plane with the name Trump on it (Wikimedia Commons)

THE LITTLE PEOPLE?

Image: It's the word Trump on the side of a skyscraper I can't cope with this (Pixel)

THE ONLY LITTLE PERSON CLOSE TO TRUMP IS RIDING A MASSIVE STUFFED LION

Image: I don't even know what to tell you. It's Trump and his wife and a child riding a stuffed lion. 

IN A PENTHOUSE

A PENTHOUSE WHICH LOOKS LIKE LIBERACE WAS LET LOOSE WITH THE GILT ON DAY FIVE OF A PARTICULARLY BAD BENDER

Image: So much gold. Just gold, everywhere.

HIS WIFE HAS SO MANY BAGS SHE HAS TO EMPLOY A BAG MAN TO CARRY THEM

Image: I did not even know there were so many styles of Louis Vuitton, and my dentists has a lot of old copies of Vogue.

Anyway. Back to Farage, who is telling the little people that they can win "against the forces of global corporatism".

 

Image: Aaaaarggghhhh (Wikipedia Screenshot)

Ugh. Okay. What next? Oh god, he's telling them they can have a Brexit moment.

“... you can beat Washington...”

“... if enough decent people...”

“...are prepared to stand up against the establishment”

Image: A screenshot from Donald Trump's Wikipedia page.

I think I need a lie down.

Watch the full clip here:

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland