A recession warning for Osborne

The UK is forecast to recover at a slower rate than every G7 country except Italy.

Away from pasties and jerry cans, there's the small matter of our shrinking economy. Yesterday the Office for National Statistics revised growth for the final quarter of 2011 down to -0.3 per cent, today the OECD predicted that the UK will suffer a double-dip recession - defined as two consecutive quarters of negative growth. The economy is forecast to shrink by -0.1 per cent in the first quarter of this year.

And that's not the only prediction to haunt George Osborne's nights. As the OECD table below shows, the UK is expected to recover at a slower rate than every G7 country except Italy.

GDP growth in the G7 economies

Annualised quarter-on-quarter growth

A

While we're forecast to contract by 0.4 per cent [in annual terms] in the next quarter, the US, where the Obama administration has maintained fiscal stimulus, is expected to grow by 2.9 per cent. Osborne's previous boast that that the UK had grown faster than the US "despite fiscal stimulus in the former and fiscal consolidation in the latter" now looks rather foolish.

As Adam Posen of the Bank of England's Monetary Policy Committee noted in his speech yesterday:

Cumulatively, the UK government tightened fiscal policy by 3% more than the US government did - taking local governments and automatic stabilizers into account - and this had a material impact on consumption. This was particularly the case because a large chunk of the fiscal consolidation in 2010 and in 2011 took the form of a VAT increase, which has a high multiplier for households.

Today, the Chancellor has responded by noting that "our own" Office for Budget Responsibility says the UK will avoid a double-dip. Indeed, the OBR predicts growth of 0.3 per cent in the first quarter of this year. Nonetheless, Osborne has already prepared his defence, insisting that "You can't turn round the British economy overnight. It became very dependent on the City of London, very dependent on public spending which had to be borrowed and we have got to change that". But after 15 months of no growth, how many will be willing to listen?

The politics of a double-dip could be more complex than many expect. At times of economic trouble, voters often look to the government, rather than the opposition, to see them through the storm. After all, despite the near absence of growth since Osborne took the helm, the Tories retain a four-point lead over Labour as the best party to manage the economy.

Conversely, a double-dip could be the point at which the Tories are finally forced to "own" the economy, no longer able to blame "the mess" they inherited from Labour or the eurozone crisis. "The man who took us back into recession" is not an attack line that Osborne will want to hand Ed Balls. He and the rest of the coalition face a nervous wait until 25 April when the ONS publishes that all-important figure.

George Osborne insisted "you can't turn the British economy overnight". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Carl Court/Getty
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To stop Jeremy Corbyn, I am giving my second preference to Andy Burnham

The big question is whether Andy Burnham or Yvette Cooper will face Jeremy in the final round of this election.

Voting is now underway in the Labour leadership election. There can be no doubt that Jeremy Corbyn is the frontrunner, but the race isn't over yet.

I know from conversations across the country that many voters still haven't made up their mind.

Some are drawn to Jeremy's promises of a new Jerusalem and endless spending, but worried that these endless promises, with no credibility, will only serve to lose us the next general election.

Others are certain that a Jeremy victory is really a win for Cameron and Osborne, but don't know who is the best alternative to vote for.

I am supporting Liz Kendall and will give her my first preference. But polling data is brutally clear: the big question is whether Andy Burnham or Yvette Cooper will face Jeremy in the final round of this election.

Andy can win. He can draw together support from across the party, motivated by his history of loyalty to the Labour movement, his passionate appeal for unity in fighting the Tories, and the findings of every poll of the general public in this campaign that he is best placed candidate to win the next general election.

Yvette, in contrast, would lose to Jeremy Corbyn and lose heavily. Evidence from data collected by all the campaigns – except (apparently) Yvette's own – shows this. All publicly available polling shows the same. If Andy drops out of the race, a large part of the broad coalition he attracts will vote for Jeremy. If Yvette is knocked out, her support firmly swings behind Andy.

We will all have our views about the different candidates, but the real choice for our country is between a Labour government and the ongoing rightwing agenda of the Tories.

I am in politics to make a real difference to the lives of my constituents. We are all in the Labour movement to get behind the beliefs that unite all in our party.

In the crucial choice we are making right now, I have no doubt that a vote for Jeremy would be the wrong choice – throwing away the next election, and with it hope for the next decade.

A vote for Yvette gets the same result – her defeat by Jeremy, and Jeremy's defeat to Cameron and Osborne.

In the crucial choice between Yvette and Andy, Andy will get my second preference so we can have the best hope of keeping the fight for our party alive, and the best hope for the future of our country too.

Tom Blenkinsop is the Labour MP for Middlesbrough South and East Cleveland