Getting from economic bingo to a growth plan

The sheer volume of economic statistics released last week highlights the challenge facing all three

The last week has produced a bumper crop of economic reports and statistics - resulting in a form of daily economic bingo - which will define the political and economic debate for the rest of the autumn and set the scene for the run into 2012. It's a week that has sharpened the economic and political challenge on growth - not just for the Coalition, but for Labour too.

It kicked off with Incomes Data Services grabbing the headlines with their finding that this year there has been a near 50 per cent increase in total remuneration for FTSE 100 directors - a hike that dwarfs the 2.3 per cent increase in average earnings, or the 4.5 per cent annual rise in the FTSE 100. It provided extra piquancy to the rapidly unfolding events at St Pauls, as well as to our new poll showing that only one in three workers feel secure in their jobs (one in four part-time workers), a finding that helps explain the ongoing weakness of consumer spending as well as the upward tick in savings.

Hot on the heels of this the OECD slashed growth figures for the eurozone to just 0.3 per cent in 2012 and to 1.8 per cent for the US. It decided to avoid producing specific forecasts for UK (and other individual European countries), as it persisted with its own brand of economic diplomacy by serving up just enough quotes for either side of the political argument to claim at least some vindication. Less diplomatic was the International Labour Organisation (ILO) - who clearly didn't receive David Cameron's new memo calling for an end to economic pessimism - with its bleak headline that it will take at least five years for employment to return to pre-crisis levels in advanced economies, making widespread social unrest far more likely.

Next up was the ONS telling us that the UK economy grew by 0.5 per cent in the third quarter of the year, above the expected 0.3 per figure, yet a long way below what is required to meet the OBR's 1.7 per cent growth forecast for 2011. It means the economy has grown just 0.6 over the last 6 months, or a paltry 0.5 over the last 12 months. Leading City commentators immediately predicted next quarter's figures could well be worse, in part because the latest purchasing managers' index (PMI) is going backwards -- suggesting the manufacturing sector is contracting for the first time since mid-2009. The gloom was only reinforced by further turmoil in Greece - with NIESR predicting a 70 per cent chance of recession in the UK next year without a resolution of the euro crisis, and a staggering 50 per cent chance even if one is found. Continued sluggish growth also shines the spotlight on the OBR who will soon need to downgrade their growth forecasts - presumably this time to a level which leaves them confident they won't have to do this once more next spring.

All of this economic news raises the stakes for both sides at Westminster. For the Coalition the clock is ticking with little more than three weeks until the Chancellor's autumn statement and the long awaited, and much vaunted, growth strategy.

The smoke signals are not encouraging. Repeated briefings are stoking contradictory expectations, risking disappointment on all sides. On the Tory right there are high hopes that the forthcoming Beecroft report will serve up some real red meat on deregulation (eg reigning in maternity rights, and ending unfair dismissal). Few of these ideas may survive Cabinet discussion, and if they do they are likely to do little to boost overall employment levels, yet could still destabilise Coalition relations. Meanwhile, those closer to the centre ground are pinning their hopes on talk of a new stream of capital projects as evidence that a meaningful 'plan A+' may emerge, involving significant new infrastructure investment (even if it falls short of a 'plan B' which slows the pace of cuts to current spending). These hopes may well also be dashed if what materialises is simply a list of modest announcements broadly in line with existing planned (cuts) to capital spending.

For their part Labour strategists are pleased that 'growth' rather than 'the deficit' has become the dominant economic and political frame in Westminster. This is perhaps the first time (other than the momentary News International meltdown) that the issue the Labour leadership wants to talk about overlaps so directly with what the media wants to write about - which provides a real opportunity.

Despite this Labour has yet to flesh out its own growth strategy - an omission that is likely to become more glaring over the next few weeks. Labour has, of course, put forward some specific growth measures. And it has made some important big picture economic arguments - most noticeably Ed Miliband's conference speech, and Ed Balls' 2010 Bloomberg lecture. Even foes of the leadership now concede that both of these were significant moments, that have aged well, and to some degree changed the political weather. Yet supporters would have to admit that neither intervention really sought to clarify the nature of the growth problem the UK is likely to face in 2012-2015 (and beyond), never mind Labour's distinctive post-crisis approach to industrial, infrastructure and innovation policy. Neither Ed Miliband's call for a new ethic of responsibility in our system of capitalism, nor Ed Balls' critique of austerity economics answers this. Thinking on longer-term growth remains a work in progress.

In the interim the risk for Labour - on growth as on other issues - is that it repeats the pattern of getting ahead on an issue by correctly identifying and naming it (think "squeezed middle" or "the promise of Britain") only to struggle to convert this into real momentum with a distinctive policy direction. It quickly needs to learn how to make its prescience pay a political dividend.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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Like it or hate it, it doesn't matter: Brexit is happening, and we've got to make a success of it

It's time to stop complaining and start campaigning, says Stella Creasy.

A shortage of Marmite, arguments over exporting jam and angry Belgians. And that’s just this month.  As the Canadian trade deal stalls, and the government decides which cottage industry its will pick next as saviour for the nation, the British people are still no clearer getting an answer to what Brexit actually means. And they are also no clearer as to how they can have a say in how that question is answered.

To date there have been three stages to Brexit. The first was ideological: an ever-rising euroscepticism, rooted in a feeling that the costs the compromises working with others require were not comparable to the benefits. It oozed out, almost unnoticed, from its dormant home deep in the Labour left and the Tory right, stoked by Ukip to devastating effect.

The second stage was the campaign of that referendum itself: a focus on immigration over-riding a wider debate about free trade, and underpinned by the tempting and vague claim that, in an unstable, unfair world, control could be taken back. With any deal dependent on the agreement of twenty eight other countries, it has already proved a hollow victory.

For the last few months, these consequences of these two stages have dominated discussion, generating heat, but not light about what happens next. Neither has anything helped to bring back together those who feel their lives are increasingly at the mercy of a political and economic elite and those who fear Britain is retreating from being a world leader to a back water.

Little wonder the analogy most commonly and easily reached for by commentators has been that of a divorce. They speculate our coming separation from our EU partners is going to be messy, combative and rancorous. Trash talk from some - including those in charge of negotiating -  further feeds this perception. That’s why it is time for all sides to push onto Brexit part three: the practical stage. How and when is it actually going to happen?

A more constructive framework to use than marriage is one of a changing business, rather than a changing relationship. Whatever the solid economic benefits of EU membership, the British people decided the social and democratic costs had become too great. So now we must adapt.

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. This is easier said than done, but can also offer hope. Specialising and skilling up also means we can resist those who want us to jettison hard-won environmental and social protections as an alternative. 

Most accept such a transition will take time. But what is contested is that it will require openness. However, handing the public a done deal - however well mediated - will do little to address the division within our country. Ensuring the best deal in a way that can garner the public support it needs to work requires strong feedback channels. That is why transparency about the government's plans for Brexit is so important. Of course, a balance needs to be struck with the need to protect negotiating positions, but scrutiny by parliament- and by extension the public- will be vital. With so many differing factors at stake and choices to be made, MPs have to be able and willing to bring their constituents into the discussion not just about what Brexit actually entails, but also what kind of country Britain will be during and after the result - and their role in making it happen. 

Those who want to claim the engagement of parliament and the public undermines the referendum result are still in stages one and two of this debate, looking for someone to blame for past injustices, not building a better future for all. Our Marmite may be safe for the moment, but Brexit can’t remain a love it or hate it phenomenon. It’s time for everyone to get practical.