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

Photo: Getty
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Amber Rudd's ignorance isn't just a problem for the laws she writes

Politicians' lack of understanding leads to the wrong laws - and leaves real problems unchecked. 

Amber Rudd’s interview with Andrew Marr yesterday is not going to feature in her highlights reel, that is for certain. Her headline-grabbing howler was her suggesting was that to fight terror “the best people…who understand the necessary hashtags” would stop extremist material “ever being put up, not just taken down”, but the entire performance was riddled with poorly-briefed errors.

During one particularly mystifying exchange, Rudd claimed that she wasn’t asking for permission to “go into the Cloud”, when she is, in fact, asking for permission to go into the Cloud.

That lack of understanding makes itself felt in the misguided attempt to force tech companies to install a backdoor in encrypted communications. I outline some of the problems with that approach here, and Paul Goodman puts it well over at ConservativeHome, the problem with creating a backdoor is that “the security services would indeed be able to travel down it.  So, however, might others – the agencies serving the Chinese and Russian governments, for example, not to mention non-state hackers and criminals”.

But it’s not just in what the government does that makes ministers’ lack of understanding of tech issues a problem. As I’ve written before, there is a problem where hate speech is allowed to flourish freely on new media platforms. After-the-fact enforcement means that jihadist terrorism and white supremacist content can attract a large audience on YouTube and Facebook before it is taken down, while Twitter is notoriously sluggish about removing abuse and hosts a large number of extremists on its site. At time of writing, David Duke, the former head of the Ku Klux Klan, has free use of YouTube to post videos with titles such as “CNN interview on Bannon exposes Jewish bias”, “Will the white race survive?” and “Stop the genocide of European mankind”. It’s somewhat odd, to put it mildly, that WhatsApp is facing more heat for a service that is enjoyed by and protects millions of honest consumers while new media is allowed to be intensely relaxed about hosting hate speech.

Outside of the field of anti-terror, technological illiteracy means that old-fashioned exploitation becomes innovative “disruption” provided it is facilitated by an app. Government and opposition politicians simultaneously decry old businesses’ use of zero-hours contracts and abuse of self-employment status to secure the benefits of a full-time employee without having to bear the costs, while hailing and facilitating the same behaviour provided the company in question was founded after 2007.

As funny as Rudd’s ill-briefed turn on the BBC was, the consequences are anything but funny. 

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