It's not just the eurozone that could push the UK back into recession

The NIESR predicts a 70% chance of recession if the eurozone crisis is not solved -- and a 50% chanc

Most of this morning's papers reported on the latest study from the National Institute of Economic and Social Research (NIESR). The figure they've chosen to lead on is that the UK has a 70 per cent chance of recession if policymakers fail to resolve the eurozone crisis. What gained less attention was the prediction that there is around a 50 per cent chance of a recession even if the crisis is successfully resolved.

Interestingly, the focus on the eurozone plays into the government's new emphasis on global factors in the UK's sluggish growth. When confronted with growth of just 0.5 per cent in the last 12 months at PMQs yesterday, Cameron responded that any growth was good amid the "global storm in the world economy". This is an important shift, given that in opposition Cameron slammed Gordon Brown for making the same argument, and that the coalition has repeatedly refused to acknowledge the role of the banking crash in creating the deficit, instead blaming Labour's spending.

The NIESR warned that the economy was in for the slowest recovery in 100 years, and that UK fiscal policy was "too tight" in the short-term. While the eurozone crisis is a concern, the fact that there is a 50 per cent chance of falling back into recession regardless shows that the problem is not just global, but that our leaders are not dealing with it in the right way. If global factors created the crisis, George Osborne's aggressive deficit reduction strategy has ensured we will not be the first out of it.

 

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

Len McCluskey. Photo: Getty
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Unite leadership race: What Len McCluskey's victory means

His margin is smaller than expected, but you only need to win by one. 

Come at the king, best not miss. And they did miss, albeit by a smaller margin than many expected. Len McCluskey has defeated Gerard Coyne, his Corbynsceptic rival, by 59,067 votes to 53,544 to remain as Unite's general secretary. Ian Allinson, running to McCluskey’s left, did surprisingly well with 17,143 votes.

A couple of things to note. The turnout was low – just 12.2 per cent – brought down by, among other things, the need to cast a postal vote and the view of the McCluskey camp that the smaller the turnout, the more important the payroll vote would be. But more significant is that Unite has shed about half a million members, confirming that it is anachronistic to refer to it as “Britain’s largest trade union”. That is, for the moment, Unison, a public sector union. (Unison actually had a lightly larger general fund membership by the close of 2015 but this decisively confirms that trend.)

The shift attests to the bigger – and neglected – story about the labour movement: that it is getting smaller, older, and more concentrated in the public sector. That’s a far bigger problem for the Labour party and the labour movement than who leads Unite or the Labour party.

That aside, the small margin is a shock – as I wrote last month, Unite is quite well-run these days, so you’d make McCluskey the favourite even before factoring in the ability of the incumbent to make life easier for himself. Most in the trade union movement expected McCluskey to win and win well for precisely that reason. As one senior official from another union put it: “Jaguar workers are earning more because of Len. That’s what it’s about, really.”

So the small margin means that Coyne may be found a role at the TUC and gently eased out the door rather than removed hastily. (Though the TUc would be highly unlikely to accept that arrangement.)Ian Allison, however, will be less lucky. One McCluskey loyalist said that the leftist would be “hunted with dogs” – not only was Allison expected not to do well, allies of McCluskey believed that he had agreed to tone down his campaign. Instead Allison's success contributed to the close-run result. (Unite uses first past the post to decide its internal contests.)

What does it mean for the struggle for control within Labour? Well, as far as the finely-balanced national executive committee is concerned, Unite’s nominees are elected at annual conference so any changes would be a way off, in any case.

The result does however increase the chances that Jeremy Corbyn will be able to stay on after a defeat. Removing Corbyn would mean handing control back to Tom Watson, with whom McCluskey's relations are now at an all time low. “I think there’s a feeling of: you came for me, you bastard, now I’m coming for you,” a trade union official says. That means that the chances that Corbyn will be able to weather a defeat on 8 June – provided Labour retain close to what one figure dubbed the “magic number” of 200 seats – have now considerably increased.

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

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