GDP figures: a reaction round-up

"The government is failing to get public spending under control."

GDP fell 0.3 per cent in the last quarter of 2012. Although markets held relatively steady, the Sterling plummeted, and economists are warning that the UK is in danger of losing its AAA rating:

Charles Levy, senior economist at The Work Foundation:

Following three years of a flat economy, today's GDP figures confirm that our economy is again contracting, raising the prospect of a triple dip recession. 2012 saw considerable improvements in the labour market, with over half a million new jobs created, though many part-time. However, without growth even this improvement will be hard to sustain.

Mark Littlewood, Director General at the Institute of Economic Affairs:

These figures are clearly very disappointing. If the government does indeed have a strategy for growth, it plainly isn't working.

The government's independent forecaster had predicted the economy would be growing by about 2 per cent or 3 per cent by now. In fact, it is flatlining or even slipping backwards into a triple dip recession.

The government is failing to get public spending under control. This year alone, George Osborne will add £4,000 to the national debt for each and every British household. Far from a programme of austerity, the coalition are running up collossal budget deficits.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club:

Today's GDP figures are right at the lower end of our expectations. The manufacturing and services figures came in pretty much where we expected them to but the construction outturn is very disappointing in the context of the monthly data that has already been published. Construction output must have collapsed in December to get such a small boost over the quarter as a whole.

The extraction sector also continues to exert a major drag. Where oil production was once a major support to UK activity, the sector is declining rapidly and the Q4 collapse means that output has now fallen by almost 40% over the past five years. This is having a significant impact on the GDP figures, the excluding oil measure is just over 2% short of previous peaks, in contrast to the 3.5% shortfall for GDP.

Nawaz Ali, UK Market Analyst for Western Union Business Solutions:

Britain's bigger-than-expected economic slump may now force the central bank to re-open its stimulus cupboard as soon as next month. Governor King may even reach for something unexpected in order to eliminate the risk of a triple-dip recession.

Meanwhile, Chancellor George Osborne could also bow to pressure from austerity-doves in his March budget update, but will also be well aware that Britain is now a step closer to losing its triple-A ratings crown.

The pound is falling sharply in global currency markets after the figures reinforced views that 2012 was a "lost year" for UK growth.

Frances O'Grady from the TUC:

Today's figures confirm our worst fears that the Chancellor's austerity plan has pushed the UK economy to the brink of an unprecedented triple-dip recession.

We are now mid-way through the coalition's term of office
and its economic strategy has been a complete disaster. The economy has grown by just 1%, real wages have fallen, and the manufacturing and construction sectors have shrunk. We remain as dependent on the City as we did before the financial crash.

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Labour's establishment suspects a Momentum conspiracy - they're right

Bernie Sanders-style organisers are determined to rewire the party's machine.  

If you wanted to understand the basic dynamics of this year’s Labour leadership contest, Brighton and Hove District Labour Party is a good microcosm. On Saturday 9 July, a day before Angela Eagle was to announce her leadership bid, hundreds of members flooded into its AGM. Despite the room having a capacity of over 250, the meeting had to be held in three batches, with members forming an orderly queue. The result of the massive turnout was clear in political terms – pro-Corbyn candidates won every position on the local executive committee. 

Many in the room hailed the turnout and the result. But others claimed that some in the crowd had engaged in abuse and harassment.The national party decided that, rather than first investigate individuals, it would suspend Brighton and Hove. Add this to the national ban on local meetings and events during the leadership election, and it is easy to see why Labour seems to have an uneasy relationship with mass politics. To put it a less neutral way, the party machine is in a state of open warfare against Corbyn and his supporters.

Brighton and Hove illustrates how local activists have continued to organise – in an even more innovative and effective way than before. On Thursday 21 July, the week following the CLP’s suspension, the local Momentum group organised a mass meeting. More than 200 people showed up, with the mood defiant and pumped up.  Rather than listen to speeches, the room then became a road test for a new "campaign meetup", a more modestly titled version of the "barnstorms" used by the Bernie Sanders campaign. Activists broke up into small groups to discuss the strategy of the campaign and then even smaller groups to organise action on a very local level. By the end of the night, 20 phonebanking sessions had been planned at a branch level over the following week. 

In the past, organising inside the Labour Party was seen as a slightly cloak and dagger affair. When the Labour Party bureaucracy expelled leftwing activists in past decades, many on went further underground, organising in semi-secrecy. Now, Momentum is doing the exact opposite. 

The emphasis of the Corbyn campaign is on making its strategy, volunteer hubs and events listings as open and accessible as possible. Interactive maps will allow local activists to advertise hundreds of events, and then contact people in their area. When they gather to phonebank in they will be using a custom-built web app which will enable tens of thousands of callers to ring hundreds of thousands of numbers, from wherever they are.

As Momentum has learned to its cost, there is a trade-off between a campaign’s openness and its ability to stage manage events. But in the new politics of the Labour party, in which both the numbers of interested people and the capacity to connect with them directly are increasing exponentially, there is simply no contest. In order to win the next general election, Labour will have to master these tactics on a much bigger scale. The leadership election is the road test. 

Even many moderates seem to accept that the days of simply triangulating towards the centre and getting cozy with the Murdoch press are over. Labour needs to reach people and communities directly with an ambitious digital strategy and an army of self-organising activists. It is this kind of mass politics that delivered a "no" vote in Greece’s referendum on the terms of the Eurozone bailout last summer – defying pretty much the whole of the media, business and political establishment. 

The problem for Corbyn's challenger, Owen Smith, is that many of his backers have an open problem with this type of mass politics. Rather than investigate allegations of abuse, they have supported the suspension of CLPs. Rather than seeing the heightened emotions that come with mass mobilisations as side-effects which needs to be controlled, they have sought to joins unconnected acts of harassment, in order to smear Jeremy Corbyn. The MP Ben Bradshaw has even seemed to accuse Momentum of organising a conspiracy to physically attack Labour MPs.

The real conspiracy is much bigger than that. Hundreds of thousands of people are arriving, enthusiastic and determined, into the Labour party. These people, and their ability to convince the communities of which they are a part, threaten Britain’s political equilibrium, both the Conservatives and the Labour establishment. When the greatest hope for Labour becomes your greatest nightmare, you have good call to feel alarmed.