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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Meet Anne Marie Waters - the Ukip politician too extreme for Nigel Farage

In January 2016, Waters launched Pegida UK with former EDL frontman Steven Yaxley-Lennon (aka Tommy Robinson). 

There are few people in British political life who can be attacked from the left by Nigel Farage. Yet that is where Anne Marie Waters has found herself. And by the end of September she could well be the new leader of Ukip, a party almost synonymous with its beer-swilling, chain-smoking former leader.

Waters’s political journey is a curious one. She started out on the political left, but like Oswald Mosley before her, has since veered dramatically to the right. That, however, is where the similarities end. Waters is Irish, agnostic, a lesbian and a self-proclaimed feminist.

But it is her politics – rather than who she is – that have caused a stir among Ukip’s old guard. Former leader Paul Nuttall has said that her views make him “uncomfortable” while Farage has claimed Ukip is “finished” if, under her leadership, it becomes an anti-Islam party.

In her rhetoric, Waters echoes groups such as the English Defence League (EDL) and Britain First. She has called Islam “evil” and her leadership manifesto claims that the religion has turned Britain into a “fearful and censorious society”. Waters wants the banning of the burqa, the closure of all sharia councils and a temporary freeze on all immigration.

She started life in Dublin before moving to Germany in her teens to work as an au pair. Waters also lived in the Netherlands before returning to Britain to study journalism at Nottingham Trent University, graduating in 2003. She subsequently gained a second degree in law. It was then, she says, that she first learnt about Islam, which she claims treats women “like absolute dirt”. Now 39, Waters is a full-time campaigner who lives in Essex with her two dogs and her partner who is an accountant.

Waters’s first spell of serious activism was with the campaign group One Law for All, a secularist organisation fronted by the Iranian feminist and human rights activist Maryam Namazie. Waters resigned in November 2013 after four years with the organisation. According to Namazie, Waters left due to political disagreements over whether the group should collaborate with members of far-right groups.

In April 2014, Waters founded Sharia Watch UK and, in January 2016, she launched Pegida UK with former EDL frontman Steven Yaxley-Lennon (aka Tommy Robinson). The group was established as a British chapter of the German-based organisation and was set up to counter what it called the “Islamisation of our countries”. By the summer of 2016, it had petered out.

Waters twice stood unsuccessfully to become a Labour parliamentary candidate. Today, she says she could not back Labour due to its “betrayal of women” and “betrayal of the country” over Islam. After joining Ukip in 2014, she first ran for political office in the Lambeth council election, where she finished in ninth place. At the 2015 general election, Waters stood as the party’s candidate in Lewisham East, finishing third with 9.1 per cent of the vote. She was chosen to stand again in the 2016 London Assembly elections but was deselected after her role in Pegida UK became public. Waters was also prevented from standing in Lewisham East at the 2017 general election after Ukip’s then-leader Nuttall publicly intervened.

The current favourite of the 11 candidates standing to succeed Nuttall is deputy leader Peter Whittle, with Waters in second. Some had hoped the party’s top brass would ban her from standing but last week its national executive approved her campaign.

Due to an expected low turnout, the leadership contest is unpredictable. Last November, Nuttall was elected with just 9,622 votes. More than 1,000 new members reportedly joined Ukip in a two-week period earlier this year, prompting fears of far-right entryism.

Mike Hookem MEP has resigned as Ukip’s deputy whip over Waters’ candidacy, saying he would not “turn a blind eye” to extremism. By contrast, chief whip, MEP Stuart Agnew, is a supporter and has likened her to Joan of Arc. Waters is also working closely on her campaign with Jack Buckby, a former BNP activist and one of the few candidates to run against Labour in the by-election for Jo Cox’s former seat of Batley and Spen. Robinson is another backer.

Peculiarly for someone running to be the leader of a party, Waters does not appear to relish public attention. “I’m not a limelight person,” she recently told the Times. “I don’t like being phoned all the time.”

The journalist Jamie Bartlett, who was invited to the initial launch of Pegida UK in Luton in 2015, said of Waters: “She failed to remember the date of the demo. Her head lolled, her words were slurred, and she appeared to almost fall asleep while Tommy [Robinson] was speaking. After 10 minutes it all ground to an uneasy halt.”

In an age when authenticity is everything, it would be a mistake to underestimate yet another unconventional politician. But perhaps British Muslims shouldn’t panic about Anne Marie Waters just yet.

James Bloodworth is editor of Left Foot Forward

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear