Recession deniers proved wrong

Our economics editor gives his verdict.

So the recession deniers were wrong again. As I predicted, rather than GDP growth for the first quarter of 2012 being revised up it was actually revised down by the ONS today from -0.2 per cent to -0.3 per cent. Output in the production industries was -0.4 per cent, manufacturing was flat while services grew by+0.1 per cent while construction was -4.8 per cent.  The fall in construction is very serious and, according to a report of the Bank of England's agents this week, "in large part due to declining work for the public sector".

Over the last six quarters that I have called the Osborne Collapse the economy has shrunk by -0.4 per cent.  He inherited an economy for Alastair Darling that grew by 3.1 per cent over the preceding four quarters.  Here's the chart.  Four of the last six were negative:

There is every prospect that the next quarter will be negative also even if the euro area doesn't implode.  If it does things will be much worse.

David Cameron in a speech on the economy on the 17 May 2012 said:

"Despite headwinds from the Eurozone, we are on track...We are moving in the right direction.

This is total balderdash. The economy is tanking and the coalition appears totally lost on what to do about it and they still don't have a growth plan. Saying they have a Plan A doesn't do it. We are now paying the price for them not having or implementing a plan B.

Today is the time to do three things:

  1. Cut VAT to 17.5 per cent.
  2. Cut National Insurance on anyone under 25 to zero for two years.
  3. Announce a program of £50bn of infrastructure spending on shovel ready projects. Local authorities can bid for the money for any project already through the planning process. The Monetary Policy Committee can fund it via Quantitative Easing.

It really is time for the cabinet to start working hard.

Photograph: Getty Images

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

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Will Jeremy Corbyn stand down if Labour loses the general election?

Defeat at the polls might not be the end of Corbyn’s leadership.

The latest polls suggest that Labour is headed for heavy defeat in the June general election. Usually a general election loss would be the trigger for a leader to quit: Michael Foot, Gordon Brown and Ed Miliband all stood down after their first defeat, although Neil Kinnock saw out two losses before resigning in 1992.

It’s possible, if unlikely, that Corbyn could become prime minister. If that prospect doesn’t materialise, however, the question is: will Corbyn follow the majority of his predecessors and resign, or will he hang on in office?

Will Corbyn stand down? The rules

There is no formal process for the parliamentary Labour party to oust its leader, as it discovered in the 2016 leadership challenge. Even after a majority of his MPs had voted no confidence in him, Corbyn stayed on, ultimately winning his second leadership contest after it was decided that the current leader should be automatically included on the ballot.

This year’s conference will vote on to reform the leadership selection process that would make it easier for a left-wing candidate to get on the ballot (nicknamed the “McDonnell amendment” by centrists): Corbyn could be waiting for this motion to pass before he resigns.

Will Corbyn stand down? The membership

Corbyn’s support in the membership is still strong. Without an equally compelling candidate to put before the party, Corbyn’s opponents in the PLP are unlikely to initiate another leadership battle they’re likely to lose.

That said, a general election loss could change that. Polling from March suggests that half of Labour members wanted Corbyn to stand down either immediately or before the general election.

Will Corbyn stand down? The rumours

Sources close to Corbyn have said that he might not stand down, even if he leads Labour to a crushing defeat this June. They mention Kinnock’s survival after the 1987 general election as a precedent (although at the 1987 election, Labour did gain seats).

Will Corbyn stand down? The verdict

Given his struggles to manage his own MPs and the example of other leaders, it would be remarkable if Corbyn did not stand down should Labour lose the general election. However, staying on after a vote of no-confidence in 2016 was also remarkable, and the mooted changes to the leadership election process give him a reason to hold on until September in order to secure a left-wing succession.

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