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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It's not WhatsApp that was at fault in the Westminster attacks. It's our prisons

Britain's criminal justice system neither deterred nor rehabilitated Khalid Masood, and may even have facilitated his radicalisation. 

The dust has settled, the evidence has been collected and the government has decided who is to blame for the attack on Westminster. That’s right, its WhatsApp and their end-to-end encryption of messages. Amber Rudd, the Home Secretary, wants tech companies to install a backdoor into messages like these that the government can then access.

There are a couple of problems here, not least that Adrian Russell aka Khalid Masood was known to the security services but considered to be low-risk. Even if the government had had the ability to gain entry to his WhatsApp, they wouldn’t have used it. Then there’s the fact that end-to-end encryption doesn’t just protect criminals and terrorists – it protects users from criminals and terrorists. Any backdoor will be vulnerable to attack, not only from our own government and foreign powers, but by non-state actors including fraudsters, and other terrorists.

(I’m parking, also, the question of whether these are powers that should be handed to any government in perpetuity, particularly one in a country like Britain’s, where near-unchecked power is handed to the executive as long as it has a parliamentary majority.)

But the biggest problem is that there is an obvious area where government policy failed in the case of Masood: Britain’s prisons system.

Masood acted alone though it’s not yet clear if he was merely inspired by international jihadism – that is, he read news reports, watched their videos on social media and came up with the plan himself – or he was “enabled” – that is, he sought out and received help on how to plan his attack from the self-styled Islamic State.

But what we know for certain is that he was, as is a recurring feature of the “radicalisation journey”, in possession of a string of minor convictions from 1982 to 2002 and that he served jail time. As the point of having prisons is surely to deter both would-be offenders and rehabilitate its current occupants so they don’t offend again, Masood’s act of terror is an open-and-shut case of failure in the prison system. Not only he did prison fail to prevent him committing further crimes, he went on to commit one very major crime.  That he appears to have been radicalised in prison only compounds the failure.

The sad thing is that not so very long ago a Secretary of State at the Ministry of Justice was thinking seriously about prison and re-offending. While there was room to critique some of Michael Gove’s solutions to that problem, they were all a hell of a lot better than “let’s ban WhatsApp”. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.