Double-dip recession: don't say we didn't warn you

The New Statesman warned in 2009 that Osborne had no plan for growth.


Even by the standards of recent economic data, today's OECD report makes for particularly grim reading. The body's soothsayers predict that the UK will suffer a double-dip recession, with growth contracting in the fourth quarter of this year and in the first quarter of 2012. In total, the British economy will grow by just 0.5 per cent next year. To put that figure into context, recall that as recently as May the OECD expected growth of 1.8 per cent, while in March the Office for Budget Responsibility predicted growth of 2.5 per cent. The outlook for jobs is little better. Unemployment is forecast to rise from 8.3 per cent at present to 9.1 per cent in 2013 as the private sector fails to compensate for public sector job losses.

These are, of course, just forecasts but recent history suggests that the most pessimistic growth forecasts are invariably the most accurate. In any case, George Osborne's 2010 promise of "a steady and sustained economic recovery, with low inflation and falling unemployment" is already a distant dream.

While many are wise after the event, the New Statesman was warning of the danger of a double-dip as long ago as March 2009 (see cover above). Our economics editor David Blanchflower predicted that premature withdrawal of fiscal stimulus would strangle growth and raise unemployment, particularly among the young.

He wrote in October 2009:

Lesson number one in a deep recession is you don't cut public spending until you are into the boom phase. John Maynard Keynes taught us that. The euro area appears to be heading back into recession and the austerity measures being introduced in certain eurozone countries, especially those in Germany, will inevitably lower UK growth, too. It is extremely unlikely, therefore, that net trade will leap to our rescue. taught us that. The consequence of cutting too soon is that you drive the economy into a depression, with the attendant threats of rapidly rising unemployment, social disorder, rising poverty, falling living standards and even soup kitchens.

In the wake of Osborne's emergency Budget, he warned:

The euro area appears to be heading back into recession and the austerity measures being introduced in certain eurozone countries, especially those in Germany, will inevitably lower UK growth, too. It is extremely unlikely, therefore, that net trade will leap to our rescue.

At a time when Osborne was being hailed by much of the British press as the country's economic saviour, we warned that he had no plan for growth. In October 2009, an NS leader argued:

Mr Osborne is a skilful politician, with a flair for rhetoric and the easy headline - the latest example being his opportunistic statements on curtailing bankers' bonuses, something that could be achieved only through concerted international co-operation. The only economic plan he seems to have is for attempting to balance the books. He does not have a plan for growth. He has a plan for a lack of growth.

In August 2010, we warned that "in spite of Mr Osborne's doctrinaire "emergency" Budget, all the economic data suggests that the UK is facing a deadly combination of rising unemployment, falling house prices, diminished consumer confidence and low - if not negative - growth for the rest of the year and beyond."

But not everyone was so doubtful about Osborne's ability to stimulate growth. Here are some influential figures and institutions who may now regret their early optimism (including the OECD itself).

My personal favourite is Nick Bosanquet, professor of health policy at Imperial College London and consultant director for Reform, who predicted in January that the UK economy would be "the surprise success of Europe in 2011". Since then, Britain has grown at a slower rate than every EU country expect Cyprus, Greece and Portugal.

And ... some who got it wrong

"The UK economy is on the mend. Economic recovery is underway, unemployment has stabilized, and financial sector health has improved. The government's strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainability."

IMF, 27 September 2010

"The Chancellor has achieved his twin objectives of setting out a credible plan for the public finances and producing a convincing growth strategy for the longer-term ... This Budget is the UK's first important step on the long journey back to economic health."

Richard Lambert, CBI Director-General, 25 June 2010

"George Osborne has faced up to the challenge. The economy needed faster and deeper deficit reduction and that's exactly what the Chancellor has delivered ... We do not believe the Budget will threaten economic recovery. Quite the contrary, it is likely to improve the economic outlook by showing the public finances are finally being brought under control."

Miles Templeman, Director General of the Institute of Directors, 22 June 2010

"The Budget announced today by the U.K. Chancellor of the Exchequer is a courageous move ... It provides the necessary degree of fiscal consolidation over the coming years to restore public finances to a sustainable path, while still supporting the recovery."

Angel Gurría, secretary general of the OECD, 22 June 2010

"We are relatively sanguine about the UK's ability to grow through the fiscal tightening. In an open economy, robust global growth - and that's what it's looking like at the moment - does quite a bit of the work."

Ben Broadbent, Goldman Sachs, 3 January 2011

"Now for one prediction: consumer spending will be squeezed by the regrettable (and avoidable) hike in Vat and from the (necessary) cuts in spending. But reduced debt-financed spending will go hand in hand with growth in private investment and exports, partly thanks to strong global demand, thus cushioning most of the impact. The years ahead will be very tough - but there will be no double dip recession made in Downing Street."

Allister Heath, City AM editor, 24 June 2010

"The UK economy will be the surprise success of Europe in 2011 ... The enterprise culture of SMEs, exports and the strong corporate sector will all help recovery, which will be in the Midlands as well as in the south-east."

Nick Bosanquet, Imperial College London and Reform, 3 January 2011

George Eaton is political editor of the New Statesman.

Show Hide image

It's Gary Lineker 1, the Sun 0

The football hero has found himself at the heart of a Twitter storm over the refugee children debate.

The Mole wonders what sort of topsy-turvy universe we now live in where Gary Lineker is suddenly being called a “political activist” by a Conservative MP? Our favourite big-eared football pundit has found himself in a war of words with the Sun newspaper after wading into the controversy over the age of the refugee children granted entry into Britain from Calais.

Pictures published earlier this week in the right-wing press prompted speculation over the migrants' “true age”, and a Tory MP even went as far as suggesting that these children should have their age verified by dental X-rays. All of which leaves your poor Mole with a deeply furrowed brow. But luckily the British Dental Association was on hand to condemn the idea as unethical, inaccurate and inappropriate. Phew. Thank God for dentists.

Back to old Big Ears, sorry, Saint Gary, who on Wednesday tweeted his outrage over the Murdoch-owned newspaper’s scaremongering coverage of the story. He smacked down the ex-English Defence League leader, Tommy Robinson, in a single tweet, calling him a “racist idiot”, and went on to defend his right to express his opinions freely on his feed.

The Sun hit back in traditional form, calling for Lineker to be ousted from his job as host of the BBC’s Match of the Day. The headline they chose? “Out on his ears”, of course, referring to the sporting hero’s most notable assets. In the article, the tabloid lays into Lineker, branding him a “leftie luvvie” and “jug-eared”. The article attacked him for describing those querying the age of the young migrants as “hideously racist” and suggested he had breached BBC guidelines on impartiality.

All of which has prompted calls for a boycott of the Sun and an outpouring of support for Lineker on Twitter. His fellow football hero Stan Collymore waded in, tweeting that he was on “Team Lineker”. Leading the charge against the Murdoch-owned title was the close ally of Labour leader Jeremy Corbyn and former Channel 4 News economics editor, Paul Mason, who tweeted:

Lineker, who is not accustomed to finding himself at the centre of such highly politicised arguments on social media, responded with typical good humour, saying he had received a bit of a “spanking”.

All of which leaves the Mole with renewed respect for Lineker and an uncharacteristic desire to watch this weekend’s Match of the Day to see if any trace of his new activist persona might surface.


I'm a mole, innit.