Britain on the brink of a double-dip recession

GDP fell by 0.2 per cent in the final quarter of 2011.

In the end, it was even worse than expected. The Office for Budget Responsibility predicted that the economy shrunk by 0.1 per cent in quarter four of 2011 but this morning's preliminary figures show that it shrunk by 0.2 per cent. What's more, the detailed breakdown of the figures shows that without a rise in "government services" such as health and education, which were up by 0.4 per cent on the quarter, GDP would have fallen even faster, by 0.3 per cent. So much for a private sector-led recovery. Should the economy contract again in this quarter, Britain will officially be back in recession.

The negative figure was, as the Treasury noted, hardly unexpected. Indeed, George Osborne had prepared the ground in his Autumn Statement, warning that "if the rest of Europe heads into recession, it may prove hard to avoid one here in the UK." But that does not make it any more less unpalatable for the Chancellor. His 2010 promise of "a steady and sustained economic recovery, with low inflation and falling unemployment" is a distant dream. Unemployment is heading towards three million, debt has reached £1 trillion and, in the last year, the economy has grown by just 0.8 per cent, one of the slowest rates in Europe. Conversely, over the previous year, partly thanks to Labour's fiscal stimulus, the economy grew by 1.6 per cent.

The lack of growth will make it even harder for Osborne to meet his deficit reduction targets, forcing him to add to the £158bn of extra borrowing already announced. It will also, inevitably, revive speculation that the UK could lose its AAA credit rating. Explaining its recent decision to downgrade the ratings of nine eurozone countries, Standard & Poor's cited concerns over growth, not borrowing. "A reform process based on a pillar of fiscal austerity alone risks becoming self-defeating," it warned. And in the case of Britain, there is plenty to be concerned about.

In political terms, however, today's figures may change little. Osborne will continue to stand by his deficit reduction plan and Labour will (rightly) continue to argue that the government is cutting "too far, too fast". As you were, then. But while the Chancellor will probably be able to shrug off one quarter of negative growth it would be a lot harder for him to explain away the first double-dip recession since 1957. The pressure for a change of course could then become irresistible.

George Eaton is political editor of the New Statesman.

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Labour's establishment suspects a Momentum conspiracy - they're right

Bernie Sanders-style organisers are determined to rewire the party's machine.  

If you wanted to understand the basic dynamics of this year’s Labour leadership contest, Brighton and Hove District Labour Party is a good microcosm. On Saturday 9 July, a day before Angela Eagle was to announce her leadership bid, hundreds of members flooded into its AGM. Despite the room having a capacity of over 250, the meeting had to be held in three batches, with members forming an orderly queue. The result of the massive turnout was clear in political terms – pro-Corbyn candidates won every position on the local executive committee. 

Many in the room hailed the turnout and the result. But others claimed that some in the crowd had engaged in abuse and harassment.The national party decided that, rather than first investigate individuals, it would suspend Brighton and Hove. Add this to the national ban on local meetings and events during the leadership election, and it is easy to see why Labour seems to have an uneasy relationship with mass politics. To put it a less neutral way, the party machine is in a state of open warfare against Corbyn and his supporters.

Brighton and Hove illustrates how local activists have continued to organise – in an even more innovative and effective way than before. On Thursday 21 July, the week following the CLP’s suspension, the local Momentum group organised a mass meeting. More than 200 people showed up, with the mood defiant and pumped up.  Rather than listen to speeches, the room then became a road test for a new "campaign meetup", a more modestly titled version of the "barnstorms" used by the Bernie Sanders campaign. Activists broke up into small groups to discuss the strategy of the campaign and then even smaller groups to organise action on a very local level. By the end of the night, 20 phonebanking sessions had been planned at a branch level over the following week. 

In the past, organising inside the Labour Party was seen as a slightly cloak and dagger affair. When the Labour Party bureaucracy expelled leftwing activists in past decades, many on went further underground, organising in semi-secrecy. Now, Momentum is doing the exact opposite. 

The emphasis of the Corbyn campaign is on making its strategy, volunteer hubs and events listings as open and accessible as possible. Interactive maps will allow local activists to advertise hundreds of events, and then contact people in their area. When they gather to phonebank in they will be using a custom-built web app which will enable tens of thousands of callers to ring hundreds of thousands of numbers, from wherever they are.

As Momentum has learned to its cost, there is a trade-off between a campaign’s openness and its ability to stage manage events. But in the new politics of the Labour party, in which both the numbers of interested people and the capacity to connect with them directly are increasing exponentially, there is simply no contest. In order to win the next general election, Labour will have to master these tactics on a much bigger scale. The leadership election is the road test. 

Even many moderates seem to accept that the days of simply triangulating towards the centre and getting cozy with the Murdoch press are over. Labour needs to reach people and communities directly with an ambitious digital strategy and an army of self-organising activists. It is this kind of mass politics that delivered a "no" vote in Greece’s referendum on the terms of the Eurozone bailout last summer – defying pretty much the whole of the media, business and political establishment. 

The problem for Corbyn's challenger, Owen Smith, is that many of his backers have an open problem with this type of mass politics. Rather than investigate allegations of abuse, they have supported the suspension of CLPs. Rather than seeing the heightened emotions that come with mass mobilisations as side-effects which needs to be controlled, they have sought to joins unconnected acts of harassment, in order to smear Jeremy Corbyn. The MP Ben Bradshaw has even seemed to accuse Momentum of organising a conspiracy to physically attack Labour MPs.

The real conspiracy is much bigger than that. Hundreds of thousands of people are arriving, enthusiastic and determined, into the Labour party. These people, and their ability to convince the communities of which they are a part, threaten Britain’s political equilibrium, both the Conservatives and the Labour establishment. When the greatest hope for Labour becomes your greatest nightmare, you have good call to feel alarmed.