On the edge

If the UK is to turn its economy around, the two key factors will be exports and productivity.

Is the UK back in recession? The OECD, a think-tank that governments love to have on their side, believes that the economic recovery has gone into reverse over the last six months. For once, most other economic forecasters disagree, and think the OECD is being far too gloomy; the consensus seems to lie with Mervyn King's "zig-zag" rather than the OECD's "double dip".

Does any of this matter? Hardly. There will be a media storm on 25 April if the GDP figures show that the economy has slipped back into recession, but the question is largely academic. For the 2.7 million Britons looking for a job, and the further 1.4 million unable to find full-time work, it will make very little difference whether the UK is technically back in recession or not.

The fact is that the UK economy is in a far more serious state than the odd double dip can do justice to. The economy has not grown for 18 months, while unemployment has increased by over 200,000 - that is far more serious than a temporary, technical recession. Flatlining is not what is supposed to happen after a recession; we were expecting faster-than-normal growth to make up some of what was lost after the financial crisis. At the Budget in 2010, the Office for Budget Responsibility forecast that the economy would grow by 2.3 per cent in 2011. It has been downgrading its forecasts ever since.

And there is little chance that the economy will ever regain the ground lost during the recession. According to the Office for Budget Responsibility, the recession will eventually leave an 11 per cent scar on the UK economy, almost five years' worth of growth that we will never get back. What we are dealing with is not just an economic slump - there is a serious problem with the way the UK economy works.

The most alarming symptom has been a dramatic slump in productivity. The value of what we produce per hour of work has fallen by 3.3 per cent since the end of 2007 - it should have increased by about 9 per cent. I don't expect many people feel they have become less productive or hard-working since the recession hit, but the value of what we collectively produce has fallen nonetheless. Of course, that productivity shock translates into a wage shock, which is why real incomes have fallen. (There is a silver lining, in that this drop in wages has stopped unemployment climbing even higher).

Now falling incomes mean that we have less money to spend, which means there is less opportunity for firms to make money in the UK, which is likely to mean further falls in incomes and fewer jobs. And that's not all we have to contend with - there is also the household debt burden left over from the financial crisis that we need to deal with, which further reduces spending. (There has been some debate in recent weeks over whether it is household debt or bank debt that causes the problems, but again this debate is academic - either way, consumer spending is squeezed).

As a result of this squeeze, the UK's domestic demand fell by 0.8 per cent during 2011. Had it not been for exports, the economy would have shrunk last year, and we'd have already had first-hand experience of a double dip recession. There are plenty of reasons why the UK economy remains in such a precarious position.

But there is some good news amidst the gloom: we are finally beginning to see exports grow significantly, several years after the devaluation of sterling in 2007. This export boom saved the economy from recession in 2011, and remains our best hope for a speedy recovery. It might also help to solve one of the core problems with the British economy; since 1997, we have consistently imported more than we export, and haven't been able to pay our way in the world.

If the UK is to turn its economy around, the two key factors will be exports and productivity. These two issues go to the heart of the underlying changes the economy needs; we need to increase the value of what we do, and sell more of it to the world. Overseas markets are the only place Britain can look to for growing demand at present, and exports are already helping to drag the economy out of the mire. But if any recovery is to be sustained, it must be accompanied by solid growth in productivity, on which the signs are much less encouraging. Reversing the UK's productivity shock will be a longer and more laborious project.

If they are to have any realistic plan for recovery, politicians of all stripes need to worry less about short-term fluctuations, and more about the key underlying factors that will make or break the economy over the next decade. There is little we can do to treat the after-symptoms of the financial crisis, but there is plenty of scope for re-making the UK economy.

Andrew Sissons is a researcher at the Big Innovation Centre at the Work Foundation

David Cameron at a GSK plant. Photo: Getty Images

Andrew Sissons is a researcher at the Big Innovation Centre based at the Work Foundation.

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The economics of outrage: Why you haven't seen the end of Katie Hopkins

Her distasteful tweet may have cost her a job at LBC, but this isn't the last we've seen of Britain's biggest troll. 

Another atrocity, other surge of grief and fear, and there like clockwork was the UK’s biggest troll. Hours after the explosion at the Manchester Arena that killed 22 mostly young and female concert goers, Katie Hopkins weighed in with a very on-brand tweet calling for a “final solution” to the complex issue of terrorism.

She quickly deleted it, replacing the offending phrase with the words “true solution”, but did not tone down the essentially fascist message. Few thought it had been an innocent mistake on the part of someone unaware of the historical connotations of those two words.  And no matter how many urged their fellow web users not to give Hopkins the attention she craved, it still sparked angry tweets, condemnatory news articles and even reports to the police.

Hopkins has lost her presenting job at LBC radio, but she is yet to lose her column at Mail Online, and it’s quite likely she won’t.

Mail Online and its print counterpart The Daily Mail have regularly shown they are prepared to go down the deliberately divisive path Hopkins was signposting. But even if the site's managing editor Martin Clarke was secretly a liberal sandal-wearer, there are also very good economic reasons for Mail Online to stick with her. The extreme and outrageous is great at gaining attention, and attention is what makes money for Mail Online.

It is ironic that Hopkins’s career was initially helped by TV’s attempts to provide balance. Producers could rely on her to provide a counterweight to even the most committed and rational bleeding-heart liberal.

As Patrick Smith, a former media specialist who is currently a senior reporter at BuzzFeed News points out: “It’s very difficult for producers who are legally bound to be balanced, they will sometimes literally have lawyers in the room.”

“That in a way is why some people who are skirting very close or beyond the bounds of taste and decency get on air.”

But while TV may have made Hopkins, it is online where her extreme views perform best.  As digital publishers have learned, the best way to get the shares, clicks and page views that make them money is to provoke an emotional response. And there are few things as good at provoking an emotional response as extreme and outrageous political views.

And in many ways it doesn’t matter whether that response is negative or positive. Those who complain about what Hopkins says are also the ones who draw attention to it – many will read what she writes in order to know exactly why they should hate her.

Of course using outrageous views as a sales tactic is not confined to the web – The Daily Mail prints columns by Sarah Vine for a reason - but the risks of pushing the boundaries of taste and decency are greater in a linear, analogue world. Cancelling a newspaper subscription or changing radio station is a simpler and often longer-lasting act than pledging to never click on a tempting link on Twitter or Facebook. LBC may have had far more to lose from sticking with Hopkins than Mail Online does, and much less to gain. Someone prepared to say what Hopkins says will not be out of work for long. 

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