Five questions answered on the shrinking UK economy

How do the figures compare with what was expected?

Figures released this morning indicate the UK could be heading for another recession. We answer five questions on the latest economy figures.

How much has the economy shrank by?

Figures released this morning by the Office of National Statistics show that the economy, or Gross Domestic Product, has shrank by 0.3 per cent in the last three months of 2012.

In the three months prior to this, the economy grew by 0.9% which is believed to have been boosted by the Olympic games.

This is the first estimate of how the economy performed in the fourth quarter, and is subject to at least two further revisions as further data is collected.

What is being cited as the cause of this latest shrinkage?

The ONS are blaming maintenance delays at the UK’s largest oil and gas field in the North Sea, which resulted in a fall of output from the extractive industries. Mining and quarrying output fell by 10.2 per cent, which knocked 0.18 per cent off of GDP.

Another industry that faired badly in the last quarter is manufacturing which fell by 1.5 per cent.

What does this mean for the outlook of the economy?

This means that the country could be heading for a third consecutive recession. Factors such as heavy snow could also hasten the economy into yet another recession. 

How do the figures compare to what was expected?

The figures are said to be worse than expected. Sir Mervyn King, the Bank of England Governnor, has said he only expects a gentle recovery this year, although now even this is looking increasing unlikely.

The International Monetary Fund did cut its 2013 forecast for British economic growth to 1pc from 1.1pc predicted in October, indicating slow growth in the UK economy was anticipated.

What reaction have economists had to these recent figures?

Jonathan Portes, an economist from the National Institute of Economic and Social Research, speaking to the BBC said:

"Underlying it, ignoring all the special factors, what we see is the economy is not delivering the sustainable growth that we would normally see at this point in the cycle.”

He added: "This is due to the [UK] government's policies and the failure of governments in the eurozone.

"They should not have cut the deficit so quickly and before the recovery was sustained."

Meanwhile the Treasury said in a statement:

"It confirms what we already knew - that Britain, like many European countries, still faces a very difficult economic situation.

"While the economy is healing, it is a difficult road."

Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

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The price of accessing higher education

Should young people from low income backgrounds abandon higher education, or do they need more support to access it? 

The determination of over 400,000 young people to go into higher education (HE) every year, despite England having the most expensive HE system in the world, and particularly the determination of over 20,000 young people from low income backgrounds to progress to HE should be celebrated. Regrettably, there are many in the media and politics that are keen to argue that we have too many students and HE is not worth the time or expense.

These views stem partly from the result of high levels of student debt, and changing graduate employment markets appearing to diminish the payoff from a degree. It is not just economics though; it is partly a product of a generational gap. Older graduates appear to find it hard to come to terms with more people, and people from dissimilar backgrounds to theirs, getting degrees.  Such unease is personified by Frank Field, a veteran of many great causes, using statistics showing over 20 per cent of graduates early in their working lives are earning less than apprentices to make a case against HE participation. In fact, the same statistics show that for the vast majority a degree makes a better investment than an apprenticeship. This is exactly what the majority of young people believe. Not only does it make a better financial investment, it is also the route into careers that young people want to pursue for reasons other than money.

This failure of older "generations" (mainly politics and media graduates) to connect with young people’s ambitions has now, via Labour's surprising near win in June, propelled the question of student finance back into the spotlight. The balance between state and individual investment in higher education is suddenly up for debate again. It is time, however, for a much wider discussion than one only focussed on the cost of HE. We must start by recognising the worth and value of HE, especially in the context of a labour market where the nature of many future jobs is being rendered increasingly uncertain by technology. The twisting of the facts to continually question the worth of HE by many older graduates does most damage not to the allegedly over-paid Vice Chancellors, but the futures of the very groups that they purport to be most concerned for: those from low income groups most at risk from an uncertain future labour market.

While the attacks on HE are ongoing, the majority of parents from higher income backgrounds are quietly going to greater and greater lengths to secure the futures of their children – recent research from the Sutton Trust showed that in London nearly half of all pupils have received private tuition. It is naive in the extreme to suggest that they are doing this so their children can progress into anything other than higher education. It is fundamental that we try and close the social background gap in HE participation if we wish to see a labour market in which better jobs, regardless of their definition, are more equally distributed across the population. Doing this requires a national discussion that is not constrained by cost, but also looks at what schools, higher education providers and employers can do to target support at young people from low income backgrounds, and the relative contributions that universities, newer HE providers and further education colleges should make. The higher education problem is not too many students; it is too few from the millions of families on average incomes and below.

Dr. Graeme Atherton is the Director of the National Education Opportunities Network (NEON). NEON are partnering with the New Statesman to deliver a fringe event at this year's Conservative party conference: ‘Sustainable Access: the Future of Higher Education in Britain’ on the Monday 2nd October 2017 from 16:30-17:30pm.