The UK could already be back in recession, say forecasters

The Item Club and the CEBR say Britain is in a double-dip recession. Where is the government's plan

Barely a week goes past without more bleak economic news. And now, according to two top forecasters, it appears that the UK could already be back in recession.

Ernst and Young's Item Club and the Centre for Economics and Business Research (CEBR) both believe that GDP shrank in the final quarter of 2011 and will fall again in the current three month period. A recession is defined as two consecutive quarters of contracting output.

This may come as no surprise (the OECD predicted similar results in November last year), but the Item Club's predictions are particularly worrying for the coalition. It is the only non-governmental forecasting group to use the same economic model for its forecasts as the Treasury and the Office for Budget Responsibility (OBR).

The Item Club's report predicts that the economy will grow just 0.2 per cent this year, and will not return to normal levels of growth until 2014, because the eurozone crisis will hold back investment in the UK. Even if a solution is found, it predicts that Britain's economy will still only grow by 1.75 per cent in 2012 and 3.8 per cent in 2014. Nor is it optimistic about job prospects, stating that unemployment will rise by a further 300,000 to just below three million people as the private sector fails to compensate for public sector job losses.

The CEBR reiterates these findings. It revised down its forecast for growth for 2012 from 0.7 per cent growth to a decline of 0.4 per cent, with a risk of decline of 1.1 per cent if the situation in the eurozone worsens.

For the time being, then, there is little light at the end of the tunnel. Amid these depressing forecasts about growth and unemployment, IPPR North has humanised the statistics by analysing ONS figures to show that in some areas of the UK, there are 20 jobseekers for each vacancy. In the worst affected area, West Dunbartonshire, there are 20 for each vacancy, while in London, Lewisham has 16 jobseekers for every job. It found that the national average was four jobseekers for every vacancy.

If these predictions are borne out -- and past example suggests that the most pessimistic forecasts tend to be the correct ones -- then it will be the double dip recession that the New Statesman has been warning of since March 2009. In October 2009, our Economics Editor David Blanchflower wrote:

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.

The government's sole economic priority thus far has been balancing the books. Will they come up with a plan for growth, faced with more and more bleak predictions? Somehow, it doesn't seem likely.

 

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

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Theresa May’s stage-managed election campaign keeps the public at bay

Jeremy Corbyn’s approach may be chaotic, but at least it’s more authentic.

The worst part about running an election campaign for a politician? Having to meet the general public. Those ordinary folk can be a tricky lot, with their lack of regard for being on-message, and their pesky real-life concerns.

But it looks like Theresa May has decided to avoid this inconvenience altogether during this snap general election campaign, as it turns out her visit to Leeds last night was so stage-managed that she barely had to face the public.

Accusations have been whizzing around online that at a campaign event at the Shine building in Leeds, the Prime Minister spoke to a room full of guests invited by the party, rather than local people or people who work in the building’s office space.

The Telegraph’s Chris Hope tweeted a picture of the room in which May was addressing her audience yesterday evening a little before 7pm. He pointed out that, being in Leeds, she was in “Labour territory”:

But a few locals who spied this picture online claimed that the audience did not look like who you’d expect to see congregated at Shine – a grade II-listed Victorian school that has been renovated into a community project housing office space and meeting rooms.

“Ask why she didn’t meet any of the people at the business who work in that beautiful building. Everyone there was an invite-only Tory,” tweeted Rik Kendell, a Leeds-based developer and designer who says he works in the Shine building. “She didn’t arrive until we’d all left for the day. Everyone in the building past 6pm was invite-only . . . They seemed to seek out the most clinical corner for their PR photos. Such a beautiful building to work in.”

Other tweeters also found the snapshot jarring:

Shine’s founders have pointed out that they didn’t host or invite Theresa May – rather the party hired out the space for a private event: “All visitors pay for meeting space in Shine and we do not seek out, bid for, or otherwise host any political parties,” wrote managing director Dawn O'Keefe. The guestlist was not down to Shine, but to the Tory party.

The audience consisted of journalists and around 150 Tory activists, according to the Guardian. This was instead of employees from the 16 offices housed in the building. I have asked the Conservative Party for clarification of who was in the audience and whether it was invite-only and am awaiting its response.

Jeremy Corbyn accused May of “hiding from the public”, and local Labour MP Richard Burgon commented that, “like a medieval monarch, she simply briefly relocated her travelling court of admirers to town and then moved on without so much as a nod to the people she considers to be her lowly subjects”.

But it doesn’t look like the Tories’ painstaking stage-management is a fool-proof plan. Having uniform audiences of the party faithful on the campaign trail seems to be confusing the Prime Minister somewhat. During a visit to a (rather sparsely populated) factory in Clay Cross, Derbyshire, yesterday, she appeared to forget where exactly on the campaign trail she was:

The management of Corbyn’s campaign has also resulted in gaffes – but for opposite reasons. A slightly more chaotic approach has led to him facing the wrong way, with his back to the cameras.

Corbyn’s blunder is born out of his instinct to address the crowd rather than the cameras – May’s problem is the other way round. Both, however, seem far more comfortable talking to the party faithful, even if they are venturing out of safe seat territory.

Anoosh Chakelian is senior writer at the New Statesman.

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