Trouble ahead for Osborne as economy is forecast to have shrunk again

Danger of a triple-dip recession as NIESR forecasts that the economy contracted by 0.3 per cent in the final quarter of 2012.

"The only function of economic forecasting is to make astrology look respectable", John Kenneth Galbraith once remarked and recent events have done nothing to prove him wrong. But the National Institute of Economic and Social Research (NIESR) has a better record than most and its latest forecast suggests that the economy shrank by 0.3 per cent in the final quarter of 2012.

"The only function of economic forecasting is to make astrology look respectable", John Kenneth Galbraith once remarked and recent events have done nothing to prove him wrong.

In the last quarter, as you'll recall, David Cameron and George Osborne boasted that we're "on the right track" after the economy grew by 1 per cent (later revised down to 0.9 per cent). But that figure was artificially inflated by the Olympic ticket sales, which added 0.2 per cent to growth, and by the bounce-back from the extra bank holiday in June, which added 0.5 per cent. To borrow Cameron's phrase, the government should never have assumed that "the good news will keep coming".

While a contraction in quarter four wouldn't represent an unprecedented "triple-dip recession" (that would require two successive quarters of negative growth), it would make it significantly harder for Osborne to claim that the economy is "healing". If the economy is shown to have shrunk in Q4, four of the last five quarters will have been negative. We'll know for sure when the Office for National Statistics publishes its first estimate of GDP on 25 January.

The longer-term outlook for the economy remains unremittingly grim. After a growth rate of 0.0 per cent in 2012, NIESR expects the economy to grow by little more than 1 per cent in 2013 and doesn't expect output to return to its pre-recession peak until 2014 at the earliest.

George Osborne said that the economy was "on the right track" after growth of 0.9 per cent in the third quarter of 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

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.