A Chancellor hoping something will turn up

Ignore the fuss about whether or not the economy is technically in recession. Economic stagnation lo

No sooner had the Office for National Statistics (ONS) announced last Wednesday that the UK economy had fallen back into recession than economists starting lining up to denounce the figures as wrong. Having predicted that the economy would have expanded at a modest rate in the first quarter of 2012, they refused to believe the ONS has got it right when it said that real GDP contracted by 0.2 per cent, after a fall of 0.3 per cent in the final quarter of 2011.

However, this debate over whether the economy grew or shrank by 0.1 or 0.2 per cent in the most recent quarter should not distract from the bigger picture. When the coalition government was formed, the economy had grown by 2.5 per cent over the preceding year - not a strong recovery from recession, but at least a recognisable one. In the subsequent seven quarters, real GDP has increased by just 0.4 per cent according to the official data. Even if the ONS has got the latest quarter wrong and the true figure is a little higher, this is a pretty dismal performance.

In part, this is down to bad luck - in particular the effect of higher food and energy prices on spending power and the Eurozone crisis – but government policies and rhetoric are also to blame.

The hike in VAT from 17.5 to 20 per cent added to the squeeze on households’ spending power and massive cuts in government capital spending have hit activity in the construction sector.

There is a sharp contrast with the United States, where there has been less urgency about tightening fiscal policy and which also released a preliminary estimate of first quarter GDP this week. There output increased by 0.75 per cent in the final quarter of 2011 and 0.55 per cent in the first quarter of this year. So while the UK economy contracted by 0.5 per cent over the last two quarters, the US economy expanded by 1.3 per cent.

The government’s rhetoric about the need for austerity in the public sector has also not helped. When they took office, Cameron and Osborne believed in the idea of an ‘expansionary fiscal contraction’: that cutting the budget deficit sharply would so boost confidence in the private sector that companies would step up their investment and recruitment programmes and the economy would grow faster than if the deficit had not been cut. It followed that the tougher they were on the deficit, the greater would be the boost to confidence and the stronger would be economic growth.

After almost two years, the idea of expansionary fiscal contraction has been shown to be patently false. As many economists warned at the time, the most likely result from public sector austerity is economic stagnation. The more the government increased taxes and cut public spending and the more it talked about austerity, the more companies worried about the outlook for demand. This made them understandably reluctant to invest and recruit. The government’s cuts mean there were 350,000 fewer jobs in the public sector in December 2011 compared to June 2010, but the private sector only created 320,000 jobs over the same period.

Despite this evidence, the Prime Minister and the Chancellor are sticking to the line that any deviation from their plan to cut the deficit would make matters worse. 90 per cent of the cuts in public spending are still to be implemented, meaning many more jobs will be lost in the public sector, and there is little to suggest the private sector is willing to step up recruitment to fill the gap.

George Osborne is simply left hoping that something turns up to change the situation. Or rather that something specific – inflation – turns down, so that real incomes start to increase again. Unfortunately, the latest figures, showing inflation of 3.5 per cent and an annual increase in regular earnings of just 1.6 per cent, are not encouraging.

Ignore the fuss about whether or not the economy is technically in recession, the economic stagnation that began in the middle of 2010 looks set to extend for some while yet.

Tony Dolphin is Chief Economist at the IPPR 

Source: Getty Images

Tony Dolphin is chief economist at IPPR

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Anxiety is not cool, funny or fashionable

A charitable initative to encourage sufferers to knit a Christmas jumper signalling their condition is well-intentioned but way off the mark.

The other night, I had one of those teeth-falling-out dreams. I dreamt I was on a bus, and every time it stopped one of my teeth plunked effortlessly out of my skull. “Shit,” I said to myself, in the dream, “this is like one of those teeth-falling out dreams”. Because – without getting too Inception – even in its midst, I realised this style of anxiety dream is a huge cliché.

Were my subconscious a little more creative, maybe it would’ve concocted a situation where I was on a bus (sure, bus, why not?), feeling anxious (because I nearly always feel anxious) and I’m wearing a jumper with the word “ANXIOUS” scrawled across my tits, so I can no longer hyperventilate – in private — about having made a bad impression with the woman who just served me in Tesco. What if, in this jumper, those same men who tell women to “smile, love” start telling me to relax. What if I have to start explaining panic attacks, mid-panic attack? Thanks to mental health charity Anxiety UK, this more original take on the classic teeth-falling-out dream could become a reality. Last week, they introduced an awareness-raising Christmas “anxiety” jumper.

It’s difficult to slate anyone for doing something as objectively important as tackling the stigma around mental health problems. Then again, right now, I’m struggling to think of anything more anxiety-inducing than wearing any item of clothing that advertises my anxiety. Although I’m fully prepared to accept that I’m just not badass enough to wear such a thing. As someone whose personal style is “background lesbian”, the only words I want anywhere near my chest are “north” and “face”.  

It should probably be acknowledged that the anxiety jumper isn’t actually being sold ready to wear, but as a knitting pattern. The idea being that you make your own anxiety jumper, in whichever colours you find least/most stressful. I’m not going to go on about feeling “excluded” – as a non-knitter – from this campaign. At the same time, the “anxiety jumper” demographic is almost definitely twee middle class millennials who can/will knit.

Photo: Anxiety UK

Unintentionally, I’m sure, a jumper embellished with the word “anxious” touts an utterly debilitating condition as a trend. Much like, actually, the “anxiety club” jumper that was unanimously deemed awful earlier this year. Granted, the original anxiety jumper — we now live in a world with at least two anxiety jumpers — wasn’t charitable or ostensibly well intentioned. It had a rainbow on it. Which was either an astute, ironic comment on how un-rainbow-like  anxiety is or, more likely, a poorly judged non sequitur farted into existence by a bored designer. Maybe the same one who thought up the Urban Outfitters “depression” t-shirt of 2014.

From Zayn Malik to Oprah Winfrey, a growing number of celebrities are opening up about what may seem, to someone who has never struggled with anxiety, like the trendiest disorder of the decade. Anxiety, of course, isn’t trendy; it’s just incredibly common. As someone constantly reassured by the fact that, yes, millions of other people have (real life) panic meltdowns on public transport, I could hardly argue that we shouldn’t be discussing our personal experiences of anxiety. But you have to ask whether anyone would be comfortable wearing a jumper that said “schizophrenic” or “bulimic”. Anxiety, it has to be said, has a tendency – as one of the more “socially acceptable” mental illnesses — to steal the limelight.

But I hope we carry on talking anxiety. I’m not sure Movember actually gets us talking about prostates, but it puts them out there at least. If Christmas jumpers can do the same for the range of mental health issues under the “anxiety” umbrella, then move over, Rudolph.

Eleanor Margolis is a freelance journalist, whose "Lez Miserable" column appears weekly on the New Statesman website.