Why the Tories shouldn't get excited about "good" economic news

The economy might appear to be improving but forecasters predict a "triple-dip recession" and rising unemployment.

This week's economic news has prompted hope among the Tories that the tide is finally turning in their favour. Employment is at a record high, inflation is down to 2.2 per cent, its lowest level since November 2009, and borrowing has fallen to its lowest level for four years. The positive trend will continue next week when the Office for National Statistics (ONS) announces that the economy finally returned to growth in the third quarter (the National Institute of Economic and Social Research, for instance, has predicted growth of 0.8 per cent). Team Osborne hope that all of this will allow them to tell a plausible story of recovery.

However, it's worth pointing out several inconvenient truths. First, the next set of growth figures will be artificially inflated by the bounce back from the extra bank holiday in the previous quarter (which reduced growth by an estimated 0.5 per cent) and by the inclusion of the Olympic ticket sales (which are expected to add around 0.2 per cent to GDP). So, if the ONS announces that the economy grew by 0.8 per cent in the third quarter, the underlying rate of growth will be just 0.1 per cent.

Worse, many expect the economy to contract in the fourth quarter (what our economics editor David Blanchflower has termed a "triple-dip recession"). Bank of England MPC member Martin Weale has warned: "The Jubilee depressed output in the second quarter so you get an automatic bounce back. But if we talk about underlying growth then I think the economy is flat. I certainly would not say there is no risk of [a triple-dip recession] happening." Martin Beck, UK economist at Capital Economics, told the Today programme last week: "we expect the economy to start contracting again in the fourth quarter."

On employment, the picture is similarly mixed. As I noted when the most recent figures were published on Wednesday, 59 per cent of the 212,000 jobs created in the last quarter are part-time and nearly half (101,000) are in London, suggesting that the labour market benefited from a temporary Olympics effect. Adequately paid, full-time employment is still remarkably hard to come by. Of the new jobs created over the last three months, one in three offer fewer than 15 hours week a work, while 54 per cent offer fewer than 30 hours. A near-record 1.4 million people are working part-time because they can't find full-time jobs. It's also worth noting that most forecasters expect unemployment to rise significantly next year as further spending cuts, a lack of growth and rising productivity restrict job creation. The CBI, for instance, predicts that unemployment will increase by nearly 200,000 to 2.7m.

Finally, the deficit. While September's figures were better-than-expected, borrowing so far this year remains £2.7bn (4.2 per cent) higher than in the same period last year and George Osborne is still expected to miss his annual target by £5-10bn. The Chancellor aims to borrow no more than £121bn this year, but in the first six months of 2012 he's borrowed £65.1bn. As a result, when he delivers his autumn statement on 5 December, Osborne will likely be forced to postpone his goal of eliminating the structural deficit (originally scheduled for 2015) for a third year - to 2018. Having once hoped to offer significant cuts in taxation at the next election, the Tories will only be able to promise yet more austerity.

Chancellor George Osborne speaks at the Conservative conference in Manchester earlier this month. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
Show Hide image

Peter Hitchens on Twitter seemed barely human – then he came round for tea

During his visit I realised I had an awkward duty facing me.

But what about Peter Hitchens?” everyone is asking after my last encounter with him. He came round to the Hovel, you see, the day before the column, in which I said all sorts of nasty things about him, appeared. The reason why he came round is complicated and boring, but suffice it to say that books were exchanged, in a spirit of mutual diplomatic tension.

I offered him a choice of red wine, whisky, or tea. It was five o’clock. (He was punctual, which unsurprised me. He chose tea; he is not a fan of intoxication. Aha! I thought, he’ll love this: as a foe of modernity in many of its aspects, such as duvets and central heating, he will appreciate the fact that I do not use tea bags. Loose Assam leaves, put into a scalded teapot. “Conservative in everything except politics” was a formulation – originally, I think, applied to George Orwell – that Peter’s late brother was fond of, and I thought my old-fashionedness would soothe him.

Not exactly: he noticed I was pouring semi-skimmed milk into the mug. Of course you put the milk in last when you are using tea bags. When pouring from a pot, you put the milk in first. Milk poured in afterwards does not emulsify satisfactorily. If you are one of those people who say “but how do you know if you’ve put in the right amount of milk?” then I exhort you to start trusting your pouring arm.

Semi-skimmed milk, I learned quickly, is a no-no in the world of P Hitchens.

“But Orwell himself,” I replied urbanely, “said that milk that was too creamy made the tea taste unpleasant. Not, of course, that I believe everything Orwell said, but on tea-making he is sound.”

Mr Hitchens demurred, saying that Orwell was referring to the equivalent of what we know today as Gold Top. This allowed me to go off on a little rant, a positive, life-enhancing rant, about how good Gold Top is, how my children love it, etc. We moved into the living room. I noticed my shoes were more old-fashioned than his. Come to think of it, they may have been older than him. They’re almost certainly older than me.

There was a mood of civility in the air. Slightly strained, perhaps, like his tea, but unmistakably present. Part of the reason was that I had mentioned our forthcoming meeting on a social medium, and two of my friends, one a well-known novelist, the other a well-known columnist, both women, both left wing, had asked me, extremely sincerely, to pass on their best wishes. They knew him of old, had worked with him, were fond of him. These are two women whose opinions I take very seriously indeed. The Peter Hitchens I knew, of column and Question Time panel, was clearly not the whole picture. If these women say he’s Basically All Right, or All Right enough to ask me to pass on their best wishes, then that is pretty much good enough for me.

During his visit I realised I had an awkward duty facing me. I was becoming increasingly conscious that, the next day, in newsagents throughout the land, the latest edition of this magazine would appear, and in it, on page 82, would be a column by me, which contained several jokes at the expense of P Hitchens, Esq. And I knew that this column would not escape his vigilance. I massaged the bridge of my nose and launched into a pre-emptive apology. “I think I had better tell you...”

He seemed to take it fairly well, though I’d not given him the full nature of my assault. When we were tossing insults back and forth on Twitter, he seemed barely human; now, in my living room, he all too clearly was. I suppose this is how we all see our enemies on Twitter: as botched versions of the Turing Test, spouting opinions that are quite clearly wrong in spite of all our well-reasoned arguments. The only variable is how quickly the arguments de-evolve into base invective. I have my own theory about this. It involves Lacan, so I’ll spare you.

A couple of days later I received an email from him, courteously asking after me and my latest troubles, the ones I can’t write about due to their immensity. It also contained the precise quote from Orwell regarding milk in tea. (“Ninthly, one should pour the cream off the milk before using it for tea. Milk that is too creamy always gives tea a sickly taste.” You have to love that “ninthly”.) “Tempus mutatur,” I replied... but noted, too, that there was no mention of That Column. I was rather impressed. 

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear