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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Manchester attack: Theresa May condemns "warped and twisted" terrorist

The Prime Minister said the police were treating the explosion at the Manchester Arena as "an appalling terrorist attack".

At least 22 people are dead and around 59 have been injured, including children, after an explosion at a concert arena in Manchester that is being treated as a terrorist attack.

Police believe the attack was carried out by a single suicide bomber, who also died. However, the police have also announced the arrest of a 23-year-old man in South Manchester in connection with the attack.

Speaking before the announcement, chief constable Ian Hopkins said: "We have been treating this as a terrorist attack." The attacker was named by papers late on Tuesday as Salman Abedi, a British man of Libyan heritage. The source for this is US, rather than British, intelligence.

The victims were young concertgoers and their parents. Victims include the 18 year old Georgina Callander and the eight year old Saffie Rose Roussos.

The Prime Minister Theresa May earlier said that the country's "thoughts and prayers" were with those affected by the attack. 

She said: "It is now beyond doubt that the people of Manchester and of this country have fallen victim to a callous terrorist attack, an attack that targeted some of the youngest people in our society with cold calculation.

"This was among the worst terrorist incidents we have ever experienced in the United Kingdom, and although it is not the first time Manchester has suffered in this way, it is the worst attack the city has experienced and the worst ever to hit the north of England."

The blast occurred as an Ariana Grande concert was finishing at Manchester Arena on Monday night. According to May, the terrorist deliberately detonated his device as fans were leaving "to cause maximum carnage". 

May said the country will struggle to understand the "warped and twisted mind" that saw "a room packed with young children" as "an opportunity for carnage". 

"This attack stands out for its appalling, sickening cowardice deliberately targeting innocent and defenceless children," she said. "Young people who should have been enjoying one of the most memorable nights of their lives."

She thanked the emergency services "on behalf of the country" for their "utmost professionalism" and urged anyone with information about the attack to contact the police. 

"The general election campaign has been suspended. I will chair another meeting of Cobra later today."

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Ending her statement, she said: 

"At terrible moments like these it is customary for leaders politicians and others to condemn the perpetrators and declare that the terrorists will not win. But the fact we have been here before and we need to say this again does not make it any less true. For as so often while we experienced the worst of humanity in Manchester last night, we also saw the best.

"The cowardice of the attacker met the bravery of the emergency services and the people of Manchester. The attempt to divide us met countless acts of kindness that brought people together and in the days ahead those must be the things we remember. The images we hold in our minds should not be those of senseless slaughter, but the ordinary men and women who put their own concerns for safety aside and rushed to help."

Emergency services, including hundreds of police, worked overnight to recover the victims and secure the area, while families desperately searched for their children. The dead included children and teenagers. The injured are being treated at eight hospitals in Greater Manchester, and some are in critical condition. 

The so-called Islamic State has claimed responsibility for the attack, although this has not been independently verified, and the organisation has been slow to respond. 

Theresa May chaired a Cobra meeting on Tuesday morning and another in the afternoon. She said police believed they knew the identity of the perpretator, and were working "at speed" to establish whether he was part of a larger network. She met Manchester's chief constable, the Manchester Mayor Andy Burnham, and members of the emergency services. A flat in a Manchester suburb has been raided. 

There were reports overnight of strangers offering their homes to concertgoers, and taxis taking people away from the scene of the explosion for free.

As the news broke, Grande, who had left the stage moments before the attack, tweeted that she felt "broken". 

Manchester's newly elected metro mayor, Andy Burnham, called the explosion "an evil act" and said: "After our darkest of nights Manchester is waking up to the most difficult of dawns."

He thanked the emergency services and the people of Manchester, and said "it will be business as usual as far as possible in our great city". 

Extra police, including armed officers, have been deployed on the streets of the city, and the area around the Manchester Arena remains cordoned off. Victoria Station is closed. 

The main political parties suspended campaigning for the general election for at least 24 hours after the news broke. Labour leader Jeremy Corbyn said: “I am horrified by the horrendous events in Manchester last night. My thoughts are with families and friends of those who have died and been injured.

“Today the whole country will grieve for the people who have lost their lives."

Scotland’s First Minister Nicola Sturgeon said: “My thoughts are with the victims, their families and all those who have been affected by this barbaric attack in Manchester."

Sadiq Khan, the Mayor of London, a city which suffered a terrorist attack two months ago, tweeted that: "London stands with Manchester."

The attack happened while many Brits were sleeping, but international leaders have already been offering their condolences. Justin Trudeau, the Prime Minister of Canada, tweeted that: "Canadians are shocked by the news of the horrific attack in Manchester." The Parliament of Australia paused for a minute's silence in remembrance of the dead. 

 

 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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