In the slow lane

New economic forecasts from the OECD show how bad austerity has been for growth.

The OECD's latest interim assessment of the outlook for the G7 economies, published on 29 March, suggests the UK economy is back in recession (usually defined by economists as two consecutive quarters of falling real GDP). A day earlier the Office for National Statistics published revised national accounts data showing real GDP contracted by 0.3 per cent in the final quarter of 2011. In its report, the OECD says it thinks this will be followed by a 0.1 per cent contraction in the first quarter of 2012.

The Office for Budget Responsibility (OBR) takes a more optimistic view in its latest forecast, published alongside the budget. It thinks the economy will grow by 0.3 per cent in the first quarter.

Differences in opinion between groups of economists over the outlook for the economy are not unknown, but it is a little surprising that two essentially consensual bodies like the OECD and the OBR have come up with such different forecasts for the current quarter, particularly when we are already at the end of March.

Typically, when trying to forecast very recent developments in the economy, economists look at surveys of business confidence. These have been shown to be the most reliable indicators of short-term fluctuations in activity (measures of consumer confidence are much less useful) and they support the OBR's forecast over the OECD's. Indeed, the OBR cite an improvement in survey evidence to justify their optimism that the economy will expanded in the first quarter.

Unfortunately, the OECD is less forthcoming about the reasons for its pessimism. It does, though, also forecast a recession in the three largest euro zone countries, taken together, and it may be that its economists believe this will cause a recession in the UK too.

What the OECD forecasts do show, however, is that even if the OBR are right about the outlook for the UK in coming quarters, the UK is experiencing a relatively slow economic recovery. Four years after the economy went into recession, real GDP will still be almost 4 per cent lower than at its peak. This makes the recovery slower than any economic recovery in the UK in the last century; it also means that the UK recovery is slower than those of all the other G7 economies bar Italy.

Why is this the case? In a recent speech, Adam Posen, one of the external members of the Bank of England's Monetary Policy Committee, analysed the gap between the recovery in the US and the recovery in the UK. He concluded that it was largely the result of differences in fiscal policy. The more aggressive fiscal tightening in the UK led to weaker consumer spending growth, which in turn helped explain why investment had failed to recover in the UK as fast as in the US.

When it came to power, the coalition argued that it had no choice but to increase taxes and make substantial cuts in public spending to eliminate the fiscal deficit over the course of four years (a timetable that has now been extended to six years). It also argued that this would not be bad for growth because private sector activity would expand to fill the gap left by the public sector.

The first proposition is still open to debate - and without a counterfactual we will never know for sure whether the government was right or not. But the second proposition has been shown to be false. Whether the OECD or the OBR are proved to be right about growth in the first quarter of 2012, by any measure the economic recovery in the UK has been hugely disappointing since the coalition took office.

Rather than stimulate activity in the private sector, austerity in the public sector has made it less willing to invest and recruit. Fiscal tightening has been bad for growth.

Tony Dolphin is the senior economist at ippr

Chancellor George Osborne. Photo: Getty Images

Tony Dolphin is chief economist at IPPR

John Moore
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The man who created the fake Tube sign explains why he did it

"We need to consider the fact that fake news isn't always fake news at the source," says John Moore.

"I wrote that at 8 o'clock on the evening and before midday the next day it had been read out in the Houses of Parliament."

John Moore, a 44-year-old doctor from Windsor, is describing the whirlwind process by which his social media response to Wednesday's Westminster attack became national news.

Moore used a Tube-sign generator on the evening after the attack to create a sign on a TfL Service Announcement board that read: "All terrorists are politely reminded that THIS IS LONDON and whatever you do to us we will drink tea and jolly well carry on thank you." Within three hours, it had just fifty shares. By the morning, it had accumulated 200. Yet by the afternoon, over 30,000 people had shared Moore's post, which was then read aloud on BBC Radio 4 and called a "wonderful tribute" by prime minister Theresa May, who at the time believed it was a genuine Underground sign. 

"I think you have to be very mindful of how powerful the internet is," says Moore, whose viral post was quickly debunked by social media users and then national newspapers such as the Guardian and the Sun. On Thursday, the online world split into two camps: those spreading the word that the sign was "fake news" and urging people not to share it, and those who said that it didn't matter that it was fake - the sentiment was what was important. 

Moore agrees with the latter camp. "I never claimed it was a real tube sign, I never claimed that at all," he says. "In my opinion the only fake news about that sign is that it has been reported as fake news. It was literally just how I was feeling at the time."

Moore was motivated to create and post the sign when he was struck by the "very British response" to the Westminster attack. "There was no sort of knee-jerk Islamaphobia, there was no dramatisation, it was all pretty much, I thought, very calm reporting," he says. "So my initial thought at the time was just a bit of pride in how London had reacted really." Though he saw other, real Tube signs online, he wanted to create his own in order to create a tribute that specifically epitomised the "very London" response. 

Yet though Moore insists he never claimed the sign was real, his caption on the image - which now has 100,800 shares - is arguably misleading. "Quintessentially British..." Moore wrote on his Facebook post, and agrees now that this was ambiguous. "It was meant to relate to the reaction that I saw in London in that day which I just thought was very calm and measured. What the sign was trying to do was capture the spirit I'd seen, so that's what I was actually talking about."

Not only did Moore not mean to mislead, he is actually shocked that anyone thought the sign was real. 

"I'm reasonably digitally savvy and I was extremely shocked that anyone thought it was real," he says, explaining that he thought everyone would be able to spot a fake after a "You ain't no muslim bruv" sign went viral after the Leytonstone Tube attack in 2015. "I thought this is an internet meme that people know isn't true and it's fine to do because this is a digital thing in a digital world."

Yet despite his intentions, Moore's sign has become the centre of debate about whether "nice" fake news is as problematic as that which was notoriously spread during the 2016 United States Presidential elections. Though Moore can understand this perspective, he ultimately feels as though the sentiment behind the sign makes it acceptable. 

"I use the word fake in inverted commas because I think fake implies the intention to deceive and there wasn't [any]... I think if the sentiment is ok then I think it is ok. I think if you were trying to be divisive and you were trying to stir up controversy or influence people's behaviour then perhaps I wouldn't have chosen that forum but I think when you're only expressing your own emotion, I think it's ok.

"The fact that it became so-called fake news was down to other people's interpretation and not down to the actual intention... So in many interesting ways you can see that fake news doesn't even have to originate from the source of the news."

Though Moore was initially "extremely shocked" at the reponse to his post, he says that on reflection he is "pretty proud". 

"I'm glad that other people, even the powers that be, found it an appropriate phrase to use," he says. "I also think social media is often denigrated as a source of evil and bad things in the world, but on occasion I think it can be used for very positive things. I think the vast majority of people who shared my post and liked my post have actually found the phrase and the sentiment useful to them, so I think we have to give social media a fair judgement at times and respect the fact it can be a source for good."

Amelia Tait is a technology and digital culture writer at the New Statesman.