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.

Photo: Getty
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The campaign to keep Britain in Europe must be based on hope, not fear

Together we can show the world a generous, outward-facing Britain we can all be proud of.

Today the Liberal Democrats launched our national campaign to keep Britain in Europe. With the polls showing the outcome of this referendum is on a knife-edge, our party is determined to play a decisive role in this once in a generation fight. This will not be an easy campaign. But it is one we will relish as the UK's most outward-looking and internationalist party. Together in Europe the UK has delivered peace, created the world’s largest free trade area and given the British people the opportunity to live, work and travel freely across the continent. Now is the time to build on these achievements, not throw them all away.

Already we are hearing fear-mongering from both sides in this heated debate. On the one hand, Ukip and the feuding Leave campaigns have shamelessly seized on the events in Cologne at New Year to claim that British women will be at risk if the UK stays in Europe. On the other, David Cameron claims that the refugees he derides as a "bunch of migrants" in Calais will all descend on the other side of the Channel the minute Britain leaves the EU. The British public deserve better than this. Rather than constant mud-slinging and politicising of the world's biggest humanitarian crisis since the Second World War, we need a frank and honest debate about what is really at stake. Most importantly this should be a positive campaign, one that is fought on hope and not on fear. As we have a seen in Scotland, a referendum won through scare tactics alone risks winning the battle but losing the war.

The voice of business and civil society, from scientists and the police to environmental charities, have a crucial role to play in explaining how being in the EU benefits the British economy and enhances people's everyday lives. All those who believe in Britain's EU membership must not be afraid to speak out and make the positive case why being in Europe makes us more prosperous, stable and secure. Because at its heart this debate is not just about facts and figures, it is about what kind of country we want to be.

The Leave campaigns cannot agree what they believe in. Some want the UK to be an offshore, deregulated tax haven, others advocate a protectionist, mean-hearted country that shuts it doors to the world. As with so many populist movements, from Putin to Trump, they are defined not by what they are for but what they are against. Their failure to come up with a credible vision for our country's future is not patriotic, it is irresponsible.

This leaves the field open to put forward a united vision of Britain's place in Europe and the world. Liberal Democrats are clear what we believe in: an open, inclusive and tolerant nation that stands tall in the world and doesn't hide from it. We are not uncritical of the EU's institutions. Indeed as Liberals, we fiercely believe that power must be devolved to the lowest possible level, empowering communities and individuals wherever possible to make decisions for themselves. But we recognise that staying in Europe is the best way to find the solutions to the problems that don't stop at borders, rather than leaving them to our children and grandchildren. We believe Britain must put itself at the heart of our continent's future and shape a more effective and more accountable Europe, focused on responding to major global challenges we face.

Together in Europe we can build a strong and prosperous future, from pioneering research into life-saving new medicines to tackling climate change and fighting international crime. Together we can provide hope for the desperate and spread the peace we now take for granted to the rest of the world. And together we can show the world a generous, outward-facing Britain we can all be proud of. So if you agree then join the Liberal Democrat campaign today, to remain in together, and to stand up for the type of Britain you think we should be.