OBR chief warns Britain will miss growth targets

Robert Chote, head of the OBR, suggests that the Chancellor will miss his 1.7 per cent growth target

The head of the government's Office for Budget Responsibility (OBR) has indicated that he believes the Chancellor, George Osborne, will miss his 1.7 per cent growth target for the year.

In an interview with the Independent, Robert Chote said:

Back in March our central forecast was for 1.7 per cent growth this year, which at the time was fractionally more pessimistic than the average of the outside forecasters.

Since then obviously we've had weaker out-turns in the first and second quarters than most people, including us, anticipated. For the second quarter the ONS [Office for National Statistics] explained a variety of one-off factors that contributed to that.

As a simple matter of arithmetic, in order to get to 1.7 per cent now you'd be looking for quarter-on-quarter growth rates of 1 per cent in the second and third quarters of 2011, and there aren't many people out there expecting that.

Chote's comments will add to the pressure on Osborne, amid dismal official figures that show the economy flatlining. And he is not the first to question the 1.7 per cent figure. Earlier this week, the IMF cut Britain's growth forecast from 1.7 to 1.5 per cent, warning that the UK faces a "bumpy and uneven" recovery. This week, the National Institute for Economic and Social Research warned that "in the short-term, fiscal policy is too tight, and a modest loosening would improve prospects for output and employment with little or no negative effect on fiscal credibility".

The OBR will not produce a new forecast until later in the year, when the Chancellor gives his autumn statement. However, Chote's remarks indicate that he is keen to show that the OBR is not out of touch with developments in the economy. As voices across the political spectrum continue to voice concern about economic recovery -- the slowest in a century -- the Chancellor must show he is listening. Even the IMF, which broadly backs the austerity measures, warned that the government must be willing to respond if growth and inflation do not develop as planned.

Chote did not rule out the possibility of a "bounce back", saying "there are potential pressures in both directions". However, if this does not happen, as looks likely, Osborne must work on that ever-elusive "plan for growth". At the moment, one would be forgiven for thinking it does not exist.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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What are Len McCluskey's chances of re-election at Unite?

The union boss's re-election bid will have far-reaching consequences for the Labour party. 

Len McCluskey has stepped down early as general secretary of Unite, Britain’s largest trade union, in order to stand again for a third term. The contest has potentially far-reaching consequences for the Labour party. McCluskey was elected in 2013 to serve a five-year term; but his supporters hope that the move will allow him to stay in post until the next general election. 

Unite, as well as being Britain’s biggest trade union, is the largest affiliate to the Labour party. That makes it a power player in the party’s internal politics, although their reach and influence is often overstated. It is the GMB, a trade union from the party’s centre, which has dominated parliamentary selections so far in this parliament. “It’s easier for people who’ve met Lisa Johnson [the GMB’s political officer in charge of selection] once in the pub to get selected than it is for Len to get his favourites in,” jokes one trade union official.

That McCluskey is going now and not in 2018 is itself the result of events beyond his control. Assistant general secretary Steve Turner, long spoken of as McCluskey’s chosen successor, is judged not to have  the credibility with Unite’s left flank to win. McCluskey, who is 66, had been trying to overturn a rule barring him from standing again in 2018 due to his age. However, that plan has been mothballed after it became apparent that he does not have the necessary votes among the executive committee.

McCluskey has been dogged by the widespread perception – one that Unite’s press officers strongly deny – that his preference in the 2015 Labour leadership election was Andy Burnham, not Jeremy Corbyn. (In the end, Unite backed Corbyn.)  That matters because in 2013, McCluskey’s strongest opposition came from the left, in the shape of Jerry Hicks, a member of the Respect party who has tried for the top job three times. Since then, McCluskey has been a vocal supporter of Corbyn’s leadership and Unite underwrote much of the Islington MP's second leadership bid. But the perception that he is a fairweather friend of the Corbyn project still lingers in some circles.

However, McCluskey is unlikely to face a well-organised challenge from the left, which would potentially be fatal. 

Who might face him? Hicks is believed to be highly unlikely to mount a fourth bid for the job, while Sharon Graham, the director of organising, is “ambitious but will sit this one out”, say insiders. It is expected that someone from Unite Scotland will likely make a bid. The great hope for Labour’s Corbynsceptics is Gerard Coyne, the regional secretary in the west Midlands. Allies of McCluskey hoped he could be bought off with a parliamentary seat, but he is now all-but-certain to challenge McCluskey for the post.

McCluskey is well-prepared for his bid. Jennie Formby, a close aide and former political director, now serves as regional secretary in the South-East, in preparation for the crucial task of getting the vote out for her boss. He starts as the frontrunner, albeit a vulnerable one. Coyne, for his part, has the advantage of coming from the West Midlands, where the old Labour right – once the backbone of Amicus and its predecessor unions, now merged into Unite – is still strong and relatively well-organised.

But here's the question. Has McCluskey's friendliness with the Corbynite left alienated his members with high-paying industrial jobs, who are not enamoured with the current Labour leader? McCluskey’s allies hope that he has done enough in defending Labour’s policy commitment to Trident to offset his support for Corbyn, who is opposed to the nuclear deterrent. His opponents believe they can successfully link him to the Labour leadership’s opposition to fracking, pharmaceuticals and defence, all of which are industries whose members are represented by Unite.

This election matters within the Labour party because Unite has multiples votes on its ruling national executive committee, and on the conference floor. It is also keen to put forward Unite-backed parliamentary candidates. So whether Len McCluskey serves another term could change the direction of British politics. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.