Growth, not the deficit, will define the economic debate in 2012

And the left need to be ready to take charge of the discussion

George Osborne reminded us earlier this week that figures for GDP growth due to be published on Wednesday could show the economy contracted in the final quarter of 2011, though he was quick to point out that he had not yet seen the figures, nor was he making his own forecast; he was simply restating the view of the independent Office for Budget Responsibility (OBR).

If GDP did shrink in the final quarter of 2011, then the UK economy could be back in recession, based on economists' definition of a recession as two consecutive quarters of declining GDP (though we will have to wait until April to find out if this is really the case). Alternatively, it may be that the economy was flat, or even grew slightly, in which case a recession will technically have been avoided.

However, by focusing on the quarter by quarter numbers, we risk missing the bigger picture. Whether growth in the final quarter of 2011 turns out to have been -0.1 per cent or +0.1 per cent does not change the fact that since the Chancellor set out his austerity programme for the public sector last year, the economy has grown at an anaemic pace.

As a result, the economic recovery has been blown off course. In the first five quarters of recovery from the recent recession - that is from 2009 Q3 to 2010 Q3 - real GDP increased by 3.2 per cent. This is pretty much in line with experience following the two preceding recessions, which, in the first five quarters, saw growth of 3.1 per cent in the 1980s and 3.0 per cent in the 1990s.

But, while the economy recorded growth of 2.7 per cent in the following year of the 1980s recovery and 4.8 per cent in the following year of the 1990s recovery, growth in the UK over the last year has been just 0.5 per cent. If the OBR's forecasts are right, not just for the last quarter of 2011, but also throughout 2012, then this recovery will lag further behind the previous two (the chart includes OBR forecasts for the period 2011 Q4 to 2012 Q4).

This is not all the Chancellor's fault - though the pace of deficit reduction and his austerity rhetoric were contributory factors. The main cause of weakness in high street spending was that people had to spend more on their energy bills and petrol. More recently, the eurozone debt crisis has created uncertainty for businesses, leading to a greater reluctance to make capital investments and recruit additional workers. But weak growth in the UK enabled his opponents to argue that the Chancellor's policies were not working.

What happens in 2012 will depend, to a large extent, on developments in Europe. Petrol prices are already falling and a number of energy companies have announced cuts in their tariffs, so the squeeze on households' spending power looks set to ease. This will support high street demand. But if there is no resolution to the euro zone crisis, confidence will remain depressed and growth is likely to be little better than in 2011 (and if the crisis worsens, then there will probably be no growth at all).

If the economic recovery does pick up pace during 2012, the Chancellor will no doubt trumpet the success of his policies and it will be harder for his critics to be heard. But another year of little to no growth will lead to more calls to the Chancellor for a change of course on deficit reduction (calls that will almost certainly be ignored) and create an environment in which an alternative, growth-centred, economic strategy would get a fair hearing in public debate. If this opportunity arises, the centre-left needs to be ready to seize it.

Tony Dolphin is the senior economist and associate director of the think tank ippr

Tony Dolphin is chief economist at IPPR

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Workers' rights after Brexit? It's radio silence from the Tories

Theresa May promised to protect workers after leaving the EU. 

In her speech on Tuesday, Theresa May repeated her promise to “ensure that workers’ rights are fully protected and maintained".  It left me somewhat confused.

Last Friday, my bill to protect workers’ rights after Brexit was due to be debated and voted on in the House of Commons. Instead I sat and watched several Tory MPs speak about radios for more than four hours.

The Prime Minister and her Brexit Secretary, David Davis, have both previously made a clear promise in their speeches at Conservative Party conference to maintain all existing workers’ rights after Britain has left the European Union. Mr Davis even accused those who warned that workers’ rights may be put at risk of “scaremongering". 

My Bill would simply put the Prime Minister’s promise into law. Despite this fact, Conservative MPs showed their true colours and blocked a vote on it through filibustering - speaking for so long that the time runs out.

This included the following vital pieces of information being shared:

David Nuttall is on his second digital radio, because the first one unfortunately broke; Rebecca Pow really likes elephant garlic (whatever that is); Jo Churchill keeps her radio on a high shelf in the kitchen; and Seema Kennedy likes radio so much, she didn’t even own a television for a long time. The bill they were debating wasn’t opposed by Labour, so they could have stopped and called a vote at any point.

This practice isn’t new, but I was genuinely surprised that the Conservatives decided to block this bill.

There is nothing in my bill which would prevent Britain from leaving the EU.  I’ve already said that when the vote to trigger Article 50 comes to Parliament, I will vote for it. There is also nothing in the bill which would soften Brexit by keeping us tied to the EU. While I would personally like to see rights in the workplace expanded and enhanced, I limited the bill to simply maintaining what is currently in place, in order to make it as agreeable as possible.

So how can Theresa May's words be reconciled with the actions of her backbenchers on Friday? Well, just like when Lionel Hutz explains to Marge in the Simpsons that "there's the truth, and the truth", there are varying degrees to which the government can "protect workers' rights".

Brexit poses three immediate risks:

First, if the government were to repeal the European Communities Act without replacing it, all rights introduced to the UK through that piece of legislation would fall away, including parental leave, the working time directive, and equal rights for part-time and agency workers. The government’s Great Repeal Bill will prevent this from happening, so in that sense they will be "protecting workers’ rights".

However, the House of Commons Library has said that the Great Repeal Bill will leave those rights in secondary legislation, rather than primary legislation. While Britain is a member of the EU, there is only ever scope to enhance and extend rights over and above what had been agreed at a European level. After Brexit, without the floor of minimum rights currently provided by the EU, any future government could easily chip away at these protections, without even the need for a vote in Parliament, through what’s called a "statutory instrument". It will leave workers’ rights hanging by a thread.

The final change that could occur after we have left the EU is European Court rulings no longer applying in this country. There are a huge number of rulings which have furthered rights and increased wages for British workers - from care workers who do sleep-in shifts being paid for the full shift, not just the hours they’re awake; to mobile workers being granted the right to be paid for their travel time. These rulings may no longer have legal basis in Britain after we’ve left. 

My bill would have protected rights against all three of these risks. The government have thus far only said how they will protect against the first.

We know that May opposed the introduction of many of these rights as a backbencher and shadow minister; and that several of her Cabinet ministers have spoken about their desire to reduce employment protections, one even calling for them to be halved last year. The government has even announced it is looking at removing the right to strike from transport workers, which would contradict their May’s promise to protect workers’ rights before we’ve even left the EU.

The reality is that the Conservatives have spent the last six years reducing people’s rights at work - from introducing employment tribunal fees which are a barrier to justice for many, to their attack on workers’ ability to organise in the Trade Union Act. A few lines in May’s speech doesn’t undo the scepticism working people have about the Tories' intentions in this area. Until she puts her money where her mouth is, nor should they. 

Melanie Onn is the Labour MP for Great Grimsby.