ONS: GDP down by 0.3% in Q4 2012

Estimates present problems for the government.

The ONS has released the preliminary estimates for GDP growth in the fourth quarter of 2012: it fell by 0.3 per cent. That's worse than the OBR/Treasury's forecast of a 0.1 per cent contraction, but the Treasury says the news was "not unexpected".

The OBR will be able to defend its record somewhat, because 0.2 percentage points of the contraction are due to a significant reduction in oil and gas extraction. The ONS explains that this is resulting from "an extended and later than usual maintenance period at the UK’s largest North Sea oil field". Expect a number of commentators to rapidly become experts on North Sea oil, and why the shock should or shouldn't let the chancellor off the hook.

Nonetheless, this represents the only the latest time the OBR has been overly optimistic about GDP projections. Economic forecasts are usually wrong; but they are usually wrong symmetrically. The persistent bias — mathematically, that is — must eventually raise questions about the OBR's model.

The hit to oil extraction led to mining output falling by 10.2 per cent in the quarter, the biggest decline on record, and led to the production sector overall falling by 1.8 per cent — a contraction which was exacerbated by the continued steady contraction in manufacturing, down 1.5 per cent.

The news was less bad in other sectors, but agriculture, forestry and fishing experienced still a contraction of 0.6 per cent, while the service sector was flat. Some of that stagnation in services may be due to some "fall-back" following the Olympic games, as the impact of spending being concentrated on one period comes back to bite. The one top-level sector which experienced growth was construction, where output increased by 0.3 per cent.

The overall contraction presents the strong possibility that the UK is going to have a "triple-dip" recession, if the next quarter is negative as well. Such a sustained period of bouncing between recession and mere stagnation would be unprecedented in recent economic history. Even if we don't have a triple-dip, growth for the whole of 2012 remains exactly flat, and there are no high expectations for growth going in to 2013. We have a corrugated economy, going up and back down periodically, but with a clear — and terrifying — trend of stagnation.

The Chancellor in Davos in 2012. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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What Donald Trump could learn from Ronald Reagan

Reagan’s candidacy was built on more than his celebrity. Trump not only lacks experience as an elected official, he isn’t part of any organised political movement.

“No one remembers who came in second.” That wisdom, frequently dispensed by the US presidential candidate Donald Trump, came back to haunt him this week. Trump’s loss in the Iowa Republican caucuses to the Texas senator Ted Cruz, barely beating Senator Marco Rubio of Florida for second place, was the first crack in a campaign that has defied all expectations.

It has been a campaign built on Trump’s celebrity. Over the past eight months, his broad name recognition, larger-than-life personality and media savvy have produced a theatrical candidacy that has transfixed even those he repels. The question now is whether that celebrity will be enough – whether a man so obsessed with being “Number One” can bounce back from defeat.

Iowa isn’t everything, after all. It didn’t back the eventual Republican nominee in 2008 or 2012. Nor, for that matter, in 1980, when another “celebrity” candidate was in the mix. That was the year Iowa picked George H W Bush over Ronald Reagan – the former actor whom seasoned journalists dismissed as much for his right-wing views as for his “B-movie” repertoire. But Reagan regrouped, romped to victory in the New Hampshire primary and rode a wave of popular support all the way to the White House.

Trump might hope to replicate that success and has made a point of pushing the Reagan analogy more generally. Yet it is a comparison that exposes Trump’s weaknesses and his strengths.

Both men were once Democrats who came later in life to the Republican Party, projecting toughness, certainty and unabashed patriotism. Trump has even adopted Reagan’s 1980 campaign promise to “make America great again”. Like Reagan, he has shown he can appeal to evangelicals despite question marks over his religious conviction and divorces. In his ability to deflect criticism, too, Trump has shown himself as adept as Reagan – if by defiance rather than by charm – and redefined what it means to be “Teflon” in the age of Twitter.

That defiance, however, points to a huge difference in tone between Reagan’s candidacy and Trump’s. Reagan’s vision was a positive, optimistic one, even as he castigated “big government” and the perceived decline of US power. Reagan’s America was meant to be “a city upon a hill” offering a shining example of liberty to the world – in rhetoric at least. Trump’s vision is of an America closed off from the world. His rhetoric invokes fear as often as it does freedom.

On a personal level, Reagan avoided the vituperative attacks that have been the hallmark of Trump’s campaign, even as he took on the then“establishment” of the Republican Party – a moderate, urban, east coast elite. In his first run for the nomination, in 1976, Reagan even challenged an incumbent Republican president, Gerald Ford, and came close to defeating him. But he mounted the challenge on policy grounds, advocating the so-called “Eleventh Commandment”: “Thou shalt not speak ill of any fellow Republican.” Trump, as the TV debates between the Republican presidential candidates made clear, does not subscribe to the same precept.

More importantly, Reagan in 1976 and 1980 was the leader of a resurgent conservative movement, with deep wells of political experience. He had been president of the Screen Actors Guild in the late 1940s, waging a campaign to root out communist infiltrators. He had gone on to work for General Electric in the 1950s as a TV pitchman and after-dinner speaker, honing a business message that resonated beyond the “rubber chicken circuit”.

In 1964 he grabbed headlines with a televised speech on behalf of the Republican presidential candidate, Barry Goldwater – a bright spot in Goldwater’s otherwise ignominious campaign. Two years later he was elected governor of California – serving for eight years as chief executive of the nation’s most populous state. He built a conservative record on welfare reform, law and order, and business regulation that he pushed on to the federal agenda when he ran for president.

All this is to say that Reagan’s candidacy was built on more than his celebrity. By contrast, Trump not only lacks experience as an elected official, he isn’t part of any organised political movement – which enhanced his “outsider” status, perhaps, but not his ground game. So far, he has run on opportunism, tapping in to popular frustration, channelled through a media megaphone.

In Iowa, this wasn’t enough. To win the nomination he will have to do much more to build his organisation. He will be hoping that in the primaries to come, voters do remember who came in second. 

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war