Double-dip recession warnings grow

Will the coalition now stop dismissing its economic critics as “Labour scaremongers”?

The coalition* has so far dismissed those who warn of the danger of a double-dip recession as "Labour scaremongers". But with an increasing number of figures arguing, as our economics columnist, David Blanchflower, has done for months, that the risk is real, one wonders whether this line of attack is sustainable.

In an interview in today's Times (£), Dr Martin Weale, the newest member of the Bank of England's Monetary Policy Committee, warns of the "real risk" of a second downturn, adding: "People would be foolish to say that it can't happen or that it is definitely not going to happen." He concludes that the Bank's growth forecast of 2.8 per cent for 2011 is over-optimistic.

Weale's warning follows an important intervention by Policy Exchange's Andrew Lilico, not known as a left-wing radical, who says he has "always expected" the UK to suffer a double dip. He points out that double-dip recessions are far more common than many assume:

[T]here were double-dip recessions in 1992 (output contracted in 1992Q2 after two quarters of growth), 1976 (output contracted in 1976Q2 after two quarters of growth), 1974 (output contracted in 1974Q4 after two quarters of growth), 1962 (output contracted in 1962Q4 after three quarters of growth), 1958 (output contracted in 1958Q2 after two quarters of growth) and 1957 (output contracted in 1957Q2 after two quarters of growth).

Indeed, the only recession that did not involve a double dip was that of the early 1980s. Yet, despite this warning from history, George Osborne is said to believe that talk of a double dip is part of an "operation run by the left and its chums and driven by the likes of Ed Balls". Can we now expect Osborne to dismiss the likes of Weale and Lilico as Labour stooges?

Rather than traducing his critics, Osborne would be well advised to draw up a plan B -- and fast. Having argued that the government should cut its way out of the recession (advice thankfully rejected), he may soon learn that you can't cut your way out of a double dip.

* With the honourable exceptions of Ken Clarke and Vince Cable.

George Eaton is political editor of the New Statesman.

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How the shadow cabinet forced Jeremy Corbyn not to change Labour policy on Syria air strikes

Frontbenchers made it clear that they "would not leave the room" until the leader backed down. 

Jeremy Corbyn had been forced to back down once before the start of today's shadow cabinet meeting on Syria, offering Labour MPs a free vote on air strikes against Isis. By the end of the two-hour gathering, he had backed down twice.

At the start of the meeting, Corbyn's office briefed the Guardian that while a free would be held, party policy would be changed to oppose military action - an attempt to claim partial victory. But shadow cabinet members, led by Andy Burnham, argued that this was "unacceptable" and an attempt to divide MPs from members. Burnham, who is not persuaded by the case for air strikes, warned that colleagues who voted against the party's proposed position would become targets for abuse, undermining the principle of a free vote.

Jon Ashworth, the shadow minister without portfolio and NEC member, said that Labour's policy remained the motion passed by this year's conference, which was open to competing interpretations (though most believe the tests it set for military action have been met). Party policy could not be changed without going through a similarly formal process, he argued. In advance of the meeting, Labour released a poll of members (based on an "initial sample" of 1,900) showing that 75 per cent opposed intervention. 

When Corbyn's team suggested that the issue be resolved after the meeting, those present made it clear that they "would not leave the room" until the Labour leader had backed down. By the end, only Corbyn allies Diane Abbott and Jon Trickett argued that party policy should be changed to oppose military action. John McDonnell, who has long argued for a free vote, took a more "conciliatory" approach, I'm told. It was when Hilary Benn said that he would be prepared to speak from the backbenches in the Syria debate, in order to avoid opposing party policy, that Corbyn realised he would have to give way. The Labour leader and the shadow foreign secretary will now advocate opposing positions from the frontbench when MPs meet, with Corbyn opening and Benn closing. 

The meeting had begun with members, including some who reject military action, complaining about the "discorteous" and "deplorable" manner in which the issue had been handled. As I reported last week, there was outrage when Corbyn wrote to MPs opposing air strikes without first informing the shadow cabinet (I'm told that my account of that meeting was also raised). There was anger today when, at 2:07pm, seven minutes after the meeting began, some members received an update on their phones from the Guardian revealing that a free vote would be held but that party policy would be changed to oppose military action. This "farcical moment", in the words of one present (Corbyn is said to have been unaware of the briefing), only hardened shadow cabinet members' resolve to force their leader to back down - and he did. 

In a statement released following the meeting, a Corbyn spokesperson confirmed that a free vote would be held but made no reference to party policy: 

"Today's Shadow Cabinet agreed to back Jeremy Corbyn's recommendation of a free vote on the Government's proposal to authorise UK bombing in Syria.   

"The Shadow Cabinet decided to support the call for David Cameron to step back from the rush to war and hold a full two day debate in the House of Commons on such a crucial national decision.  

"Shadow Cabinet members agreed to call David Cameron to account on the unanswered questions raised by his case for bombing: including how it would accelerate a negotiated settlement of the Syrian civil war; what ground troops would take territory evacuated by ISIS; military co-ordination and strategy; the refugee crisis and the imperative to cut-off of supplies to ISIS."

George Eaton is political editor of the New Statesman.