Stop focusing on triple dips. Anaemic growth is just as bad

Welcome to stagnation. It's not a nice place to be.

Tomorrow, the ONS will release its second estimate of GDP growth for the fourth quarter of 2012. The revisions may be up or down, and you'd be a fool to bet on which direction it will be. But barring a miracle, it's still going to be terrible growth.

That's true even if the revisions push the estimated contraction into positive territory. Such is the focus on whether or not Britain will enter a "technical recession" for the second time running that we have started to act as if anaemic growth is acceptable. It isn't.

If nothing else, it's important to remember that GDP staying flat is the equivalent of every individual in Britain getting poorer. That's because the British population is growing, usually by somewhere between 0.5 and 1 per cent a year (0.7 per cent according to the most recent figures from the World Bank). As a result, GDP per capita, the share of the national income that each of us receives, is correspondingly lower than GDP. Unless annual GDP growth is higher than population growth, it's not even really fair to say we're "stagnating". We are getting poorer.

But even discounting that possibility, stagnation above the rate of population growth remains an extremely concerning phenomenon. 2013 overall will probably experience real growth in GDP per capita. NIESR's economic forecasts put it at 0.4 per cent growth per capita, and 1.1 per cent GDP growth:

But 1.1 per cent growth is far, far below anything that Britain would need to either keep deficit reduction on track (the main worry if you're George Osborne) or to prevent further erosion of crucial public services (the main worry if you're anyone else). The Bank of England, which made similar projections to NIESR, is so shocked that it is prepared to overlook its entire raison d'être and allow a period of above-target inflation to get us out of those doldrums.

The OBR, kings of the downward revision, have spent the last three years forecasting that 2 per cent growth was just around the corner. That remains their forecast, and currently that growth rate is projected for 2014. The OBR has previously forecast two per cent growth for 2011, 2012 and 2013. Whether that continued optimism is justified or not, when future economic plans are based on it, every miss hits even harder.

(To be clear, the problem isn't that the OBR is frequently wrong. All economic forecasts are hugely variable, and the agency makes clear in its outlooks that the rage of probable outcomes is large. The problem is that the OBR is frequently wrong in the same direction. For over two years now, it has predicted growth above the actual outcome. If someone misses the bullseye nine times in a row, they're just unlucky — but if every one of those shots hits above the centre, it's pretty likely that they need to start aiming lower.)

The worst thing about accepting stagnation as a natural, even positive, outcome is that it will lead to a huge amount of unnecessary pain. It's not just that we won't grow fast enough. It's also that we'll be trapped in a dead zone of investment, too poor for the government to finally decide it has "enough money" to start dealing with our broken housing market and crumbling infrastructure, but growing just enough that it won't be forced to abandon austerity and enact pro-growth measures which actually work.

But if the right is wrongly promoting the acceptability of stagnation, there's a parallel criticism for the left. A "technical recession" isn't that much worse than minuscule growth. The difference between 0.1 per cent contraction and 0.1 per cent growth is 0.2 percentage points. A truism, certainly, but if the Chancellor's forecast was for 2.0 per cent and the outcome was 1.8 per cent, there would be little commentary.

As our economy floats along at the zero line, sometimes slightly over, sometimes slightly under, the temptation may be to crow every time the latter occurs. But that runs the risk of implying that the former is acceptable, when it really isn't. Our corrugated economy is the problem, and that's not going away any time soon.

This puppy is sad at British economic stagnation. 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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The polls are bad, but Jeremy Corbyn’s office has a secret weapon

How a shake-up of the leadership team has steadied nerves at the top of Labour. 

If polling had existed back in 1906, Jeremy Corbyn quipped at one recent strategy meeting, the Labour Party would never have got started.

As far as Labour’s direction is concerned, it is that meeting at four o’clock every Monday afternoon that matters. The people who attend it regularly are the Labour leader, his aides, the shadow home secretary, Diane Abbott, and the shadow chancellor, John McDonnell, as well as the party’s election co-ordinator, and their respective aides.

In recent weeks, the meetings have been stormy affairs, and not only because the numbers from the party’s own pollsters, BMG Research, mirror the uniformly bleak picture from the public polls. There is also concern over Karie Murphy, Corbyn’s office manager. Murphy is highly rated by Corbyn for having brought increased intensity and efficiency to the leader’s office. Corbyn often struggles to deliver bad news in person and appreciates that Murphy will intervene on his behalf.

Her intensity is not uniformly welcomed. “She could start a fight with her own reflection,” in the wry words of one friend. An argument with Jon Trickett – the Hemsworth MP whose unusual career trajectory took him from being a parliamentary aide to Peter Mandelson to the inner sanctum of Ed Miliband’s leadership and finally to the role of election co-ordinator for Corbyn – led to Trickett going on a two-week strike, recusing himself from vital meetings and avoiding any contact with Murphy.

That row eventually led to Trickett being stripped of his role and banished from the Monday meeting. Murphy had a similar turf war with the campaigns director, Simon Fletcher, which culminated in Fletcher resigning on 17 February. In a letter to staffers, he called on the party to “keep the promise” of Corbyn’s first leadership bid, a period when Fletcher was central and Murphy had yet to start working for the Labour leader.

All of which, in better political weather, would simply be part of the back-and-forth of office politics. However, set against the backdrop of unease about by-elections in Stoke-on-Trent Central and Copeland, and a series of unhelpful leaks, it adds to a sense of vulnerability around the leadership. One loyalist shadow cabinet minister calls it “the most dangerous time” for Corbyn since he was first elected leader.

Why the danger? Contrary to popular myth, the backbone of Jeremy Corbyn’s successive landslide victories was not a hard-pressed twentysomething, struggling to find a fixed job or to get a foot on the housing ladder. The shock troops of Corbynism, at least as far as the internal battle in the Labour Party went, were baby boomers. Many of them were either working in, or on early retirement from, a charity or the public sector, deeply concerned about the rightward drift of British politics and worried about the next generation.

Corbyn’s decision to whip Labour MPs in support of triggering Article 50 – the process whereby Britain will begin its exit from the European Union – was, in their eyes, a double heresy. The vote signalled acceptance that the forces of the Eurosceptic right had won on 23 June, and it conceded that visa-free travel, membership of the single market and freedom of movement are over.

None of this is automatically great news for Corbyn’s internal critics – not least because the vote on Article 50 is rare in being an issue that unites Corbyn with most Labour MPs. Yet it adds to the sense that his leadership has passed its best-before date.

Adding to the general malaise is a series of unhelpful leaks. There was a story in the Sunday Times on 12 February claiming that the leadership was road-testing possible replacements for Corbyn, and on 20 February the Mirror claimed that the Labour leadership had commissioned a poll to find out whether or not the leader should quit his post. These stories are hotly denied by the leader’s office. Some in Corbyn’s inner circle believe they are the work of Trickett, embittered at his demotion.

It is true that Corbyn is not enjoying the job as much as he once did. However, if the conversation shifts from the minutiae of Brexit to his natural terrain of the NHS and the continuing consequences of government cuts on education and the prisons service, he could quickly find himself relishing the role once more.

Corbyn retains two powerful cards. His newly energised office, under Karie Murphy, is one. Although her brisk approach has generated some public rows, the feeling in the leader’s office is that a chief of staff was needed, and Murphy has assumed that role. The media team has also grown sharper with the addition of David Prescott (son of John), Matt Zarb-Cousin and the former Momentum spokesman James Schneider.

Corbyn’s second asset is more unexpected. His rivals inside the party now fear rather than relish an immediate end to his leadership. A former shadow cabinet member splits his supporters into two groups: “idealists and ideologues – the first we can inspire and win over, the second have to be got rid of”. In their view, the idealists have not yet moved away from Corbyn enough to guarantee victory; the ideologues, for their part, will slink off as Corbyn puts the demands of his office above their interests, as he did over Article 50.

Although self-defeating panic has never been a rare commodity in the Labour Party, the settled view of Labour MPs is that their leader must be given time and space rather than hustled out of the door. There is an awareness, too, that MPs who are united in opposition to Corbyn are divided over many other issues.

So, while the inner circle’s Monday meetings might be fraught, and Labour’s current polling would have given Keir Hardie pause, Jeremy Corbyn is safe. 

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

This article first appeared in the 24 February 2017 issue of the New Statesman, The world after Brexit