Will this be Osborne's worst week yet?

A higher deficit and a triple-dip recession could make this week even worse for the Chancellor than the last one.

Even by recent standards, last week was not a good one for George Osborne. Unemployment was found to have increased by 70,000, the IMF's chief economist warned that he was "playing with fire" by persisting with austerity, Carman Reinhart and Kenneth Rogoff, two of the economists that the Chancellor leant heavily on to justify his economic approach, had their research on debt and growth discredited, and Fitch became the second credit rating agency to strip the UK of its AAA rating

But worse could be to come this week. Tomorrow, borrowing figures for March will be released, the final set for the 2012-13 financial year, and, for the first time since Osborne entered office, they could show that the deficit has risen in annual terms. At the Budget, the OBR forecast that borrowing would be £120.9bn in 2012-13, £100m less than in 2011-12, after the Treasury forced government departments to underspend by an extraordinary £10.9bn in the final months of this year and delayed payments to some international institutions such as the UN and the World Bank. But that £100m difference leaves the Chancellor with little room for error if tax revenues fall short or spending is higher than expected. Whether the deficit marginally rose or fell in 2012-13 is of little economic significance, but it is of immense political significance. Until now, even as growth has disappeared, the Chancellor has been able to boast that borrowing "is falling" and "will continue to fall each and every year". A higher deficit would make it far harder for him to claim that Britain is "on the right track".

Then, two days later, we will learn whether the UK has suffered its first-ever triple-dip recession when the ONS releases its estimate for GDP in Q1 of this year. Again, the Chancellor is expected to have a lucky escape, with most forecasters, in common with the OBR, predicting output of around 0.1 per cent. But that also leaves Osborne with little room for comfort if growth undershoots expectations (as it done so often has in recent history). IPPR's senior economist Tony Dolphin comments: "It is touch and go whether we triple dip, I would say 50/50. Retail sales were up a fraction in March, but manufacturing is expected to be flat and ­construction down. Services will be positive, but the question is whether it will be positive enough to offset construction." Again, whether output slightly grew or slightly shrank in the first quarter is of little economic signifinance. The broad picture is one of prolonged stagnation, with periods of growth alternating with periods of contraction. But as Osborne will know, it's the politics that matter. An unprecedented triple-dip would intensify the calls from all sides - Tory backbenchers, Vince Cable, Labour - for a change of approach, be it Keynesian stimulus or a supply-side revolution. 

There is one way that Osborne could avoid a triple-dip even if the economy is found to have shrunk in Q1: the preceding double-dip could be revised away. After previously estimating that output fell by 0.3 per cent in the final quarter of 2011, the ONS now says it fell by just 0.1 per cent. The number could be further upgraded this week. But such technicalities will count for little if the economy is reported to have shrunk again. 

Tory MPs previously suggested that they would demand the removal of Osborne if the economy failed to show signs of recovery by this time, with one telling the Daily Mail: "You wouldn’t get 80 people supporting Adam Afriyie for leader but you might get 80 or 100 people saying get rid of George." There is little prospect of Cameron acquiescing to such demands. The Prime Minister and his closest political ally continue to rise and fall together. But with the local elections just over a week away and Labour showing signs of strain, a renewed bout of Tory infighting would be unwelcome for Cameron. 

Chancellor of the Exchequer George Osborne attends a press conference at the Treasury in Whitehall on February 6, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Garry Knight via Creative Commons
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Why Barack Obama was right to release Chelsea Manning

A Presidential act of mercy is good for Manning, but also for the US.

In early 2010, a young US military intelligence analyst on an army base near Baghdad slipped a Lady Gaga CD into a computer and sang along to the music. In fact, the soldier's apparently upbeat mood hid two facts. 

First, the soldier later known as Chelsea Manning was completely alienated from army culture, and the callous way she believed it treated civilians in Iraq. And second, she was quietly erasing the music on her CDs and replacing it with files holding explosive military data, which she would release to the world via Wikileaks. 

To some, Manning is a free speech hero. To others, she is a traitor. President Barack Obama’s decision to commute her 35-year sentence before leaving office has been blasted as “outrageous” by leading Republican Paul Ryan. Other Republican critics argue Obama is rewarding an act that endangered the lives of soldiers and intelligence operatives while giving ammunition to Russia. 

They have a point. Liberals banging the drum against Russia’s leak offensive during the US election cannot simultaneously argue leaks are inherently good. 

But even if you think Manning was deeply misguided in her use of Lady Gaga CDs, there are strong reasons why we should celebrate her release. 

1. She was not judged on the public interest

Manning was motivated by what she believed to be human rights abuses in Iraq, but her public interest defence has never been tested. 

The leaks were undoubtedly of public interest. As Manning said in the podcast she recorded with Amnesty International: “When we made mistakes, planning operations, innocent people died.” 

Thanks to Manning’s leak, we also know about the Vatican hiding sex abuse scandals in Ireland, plus the UK promising to protect US interests during the Chilcot Inquiry. 

In countries such as Germany, Canada and Denmark, whistle blowers in sensitive areas can use a public interest defence. In the US, however, such a defence does not exist – meaning it is impossible for Manning to legally argue her actions were in the public good. 

2. She was deemed worse than rapists and murderers

Her sentence was out of proportion to her crime. Compare her 35-year sentence to that received by William Millay, a young police officer, also in 2013. Caught in the act of trying to sell classified documents to someone he believed was a Russian intelligence officer, he was given 16 years

According to Amnesty International: “Manning’s sentence was much longer than other members of the military convicted of charges such as murder, rape and war crimes, as well as any others who were convicted of leaking classified materials to the public.”

3. Her time in jail was particularly miserable 

Manning’s conditions in jail do nothing to dispel the idea she has been treated extraordinarily harshly. When initially placed in solitary confinement, she needed permission to do anything in her cell, even walking around to exercise. 

When she requested treatment for her gender dysphoria, the military prison’s initial response was a blanket refusal – despite the fact many civilian prisons accept the idea that trans inmates are entitled to hormones. Manning has attempted suicide several times. She finally received permission to receive gender transition surgery in 2016 after a hunger strike

4. Julian Assange can stop acting like a martyr

Internationally, Manning’s continued incarceration was likely to do more harm than good. She has said she is sorry “for hurting the US”. Her worldwide following has turned her into an icon of US hypocrisy on free speech.

Then there's the fact Wikileaks said its founder Julian Assange would agree to be extradited to the US if Manning was released. Now that Manning is months away from freedom, his excuses for staying in the Equadorian London Embassy to avoid Swedish rape allegations are somewhat feebler.  

As for the President - under whose watch Manning was prosecuted - he may be leaving his office with his legacy in peril, but with one stroke of his pen, he has changed a life. Manning, now 29, could have expected to leave prison in her late 50s. Instead, she'll be free before her 30th birthday. And perhaps the Equadorian ambassador will finally get his room back. 

 

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