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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David Blunkett compares Labour membership to failed revolution “from Ukraine to Egypt”

The Labour peer and former home secretary says new members need a “meaningful political education”, and accuses unions of neglecting their “historic balance”.

There are three sorts of opposition. There’s the civil society opposition, with people campaigning in their own specific areas, people who’ve got an interest group or are delivering social enterprise or a charity. I don’t think we should underestimate that because we're going to have to hang on to it as part of the renewal of civil society.

The second is the opposition formally, within the House of Commons: those who have agreed to serve as the formal shadow ministerial teams. Because of what I’d describe as the turmoil over the last two years, they’ve either not been able to be impressive – ie. they’re trying very hard but they don't have the coherent leadership or backing to do it – or they’ve got completely different interests to what it is they’re supposed to be doing, and therefore they’re not engaged with the main task.

Then there’s the third, which is the informal opposition – Labour linked sometimes to the Lib Dems and the SNP in Parliament on the opposition benches as a whole. They’re not doing a bad job with the informal opposition. People getting on with their work on select committees, the departmental committees beginning to shape policy that they can hopefully feed to the National Executive Committee, depending on the make-up of the National Executive Committee following this year’s conference. That embryo development of coherent policy thinking will be the seed-bed for the future.

I lived through, worked through, and was integrally involved with, what happened in the early Eighties, so I know it well. And people were in despair after the ‘83 election. Although it took us a long time to pull round, we did. It’s one reason why so many people, quite rightly in my view, don't want to repeat the split of 1931 or the split of 1981.

So they are endeavouring to stay in to argue to have some vision of a better tomorrow, and to persuade those of goodwill who have joined the party – who genuinely believe in a social movement and in extra-parliamentary non-violent activity, which I respect entirely – to persuade them that they’ll only be effective if they can link up with a functioning political process at national level, and at townhall and county level as well.

In other words, to learn the lessons of what’s happened across the world recently as well as in the past, from the Ukraine to Egypt, that if the groundswell doesn’t connect to a functioning party leadership, then, with the best will in the world, it’s not going to achieve its overall goals.

How do we engage with meaningful political education within the broader Labour party and trade union movement, with the substantially increased rank-and-file membership, without being patronising – and without setting up an alternative to Momentum, which would allow Momentum to justify its existence as a party within a party?

That's the challenge of the next two years. It's not just about someone with a vision, who’s charismatic, has leadership qualities, coming forward, that in itself won’t resolve the challenge because this isn't primarily, exclusively about Jeremy Corbyn. This is about the project being entirely on the wrong trajectory.

A lot depends on what the trade unions do. They command effectively the majority on the National Executive Committee. They command the key votes at party conference. And they command the message and resources that go out on the policy or programmes. It’s not just down to personality and who wins the General Secretary of Unite; it’s what the other unions are doing to actually provide their historic balance, because they always have – until now – provided a ballast, foundation, for the Labour party, through thick and thin. And over the last two years, that historic role has diminished considerably, and they seem to just be drifting.

I don’t think anybody should expect there to be a party leadership challenge any time soon. It may be that Jeremy Corbyn might be persuaded at some point to stand down. I was against the challenge against him last year anyway, purely because there wasn't a prepared candidate, there wasn't a policy platform, and there hadn’t been a recruitment drive to back it up.

People shouldn’t expect there to be some sort of white charger out there who will bring an immediate and quick end to the pain we’re going through. I think it’s going to be a readjustment, with people coming to conclusions in the next two years that might lead the party to be in a position to fight a credible general election in 2020. I’ve every intention of laying down some good red wine and still being alive to drink it when the Labour party is elected back to power.

David Blunkett is a Labour peer and former home secretary and education secretary.

As told to Anoosh Chakelian.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition