Nick Clegg and Nigel Farage during the LBC debate on EU membership. Photograph: Getty Images.
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Clegg and Farage both got what they needed out of this debate

Audiences called the debate for Ukip but the Lib Dems are happy to have established their leader as the man who dares defend Britain's EU membership.

The instant YouGov opinion poll of the audience awarded victory to Nigel Farage. 57% thought the Ukip leader performed better; 36% called it for Nick Clegg. The rest didn’t know.

That may well reflect the underlying suspicion of the European Union that seems to be an immovable feature of British public opinion. In that respect, Clegg had the tougher gig in defending the “in” cause – standing up for a proposition endorsed by a despised political establishment. Farage needed to articulate popular resentment of the EU. His strength was in expressing that view with a degree of measured authority. He didn’t, for the most part, come across as foam-flecked maniac. He came close on a couple of occasions. (And his assertion at the end of the debate that the EU has “blood on its hands” in Ukraine stands out as a moment of intellectual depravity. Taking the Kremlin line verbatim is not a good look for any leader of a British political party.)

Clegg got off to shaky start. That was chiefly because the first question was the toughest one he had to face – why not have a referendum and why not have one now? Farage won that exchange by making the simple assertion that many pro-Europeans don’t like to ask voters the big question because they are afraid of the answer. And that, of course, is sadly true.

It was only once the Lib Dem leader got into the economic arguments and the question of cross-border policing that he got into his stride. His strategy was to ram home the line that jobs would be at stake if Britain “pulls up the drawbridge” and to keep the debate for the most part technical – his refrain about “sticking to facts” seems deliberately calibrated to steer the conversation away from emotional rhetoric. He knows on that level the pro-EU case is much harder to make in a way that resonates. He allowed himself a touchy-feely excursion on gay marriage and the democratising power of EU enlargement and those were some of his strongest moments.

It seemed to me that, taken as a whole, Clegg had more pace and poise during the debate, while Farage had moments of great effectiveness punctuated by sweaty and intemperate interludes. But the audience verdict was less generous to the deputy Prime Minister.

Still, the Lib Dems I’ve spoken to so far seem genuinely pleased with the outcome. They wryly point out that Clegg hasn’t polled 36% in anything recently, so he goes home a winner in that respect. It is worth noting that in his closing statement, the Lib Dem leader quite explicitly asked pro-Europeans to lend him their votes in May’s European parliamentary election. This, ultimately, is the point of the exercise. His message: you may not like me or the Lib Dems but in this particular race we are the only way to express support for Britain’s EU membership. (I looked into Lib Dem thinking on this point in more detail here.)

For Farage, the purpose of the exercise was to establish Ukip as a significant player in national politics whose leader debates on equal terms with top government ministers. He needed to retain some of the irreverence and forthright language that makes voters think of him as an outsider, while also presenting sufficient substance when standing next to the Deputy Prime Minister. By and large, he pulled that off. There will have been a few Tory MPs watching and listening tonight, asking themselves why David Cameron can’t bring himself to say some of the things the Ukip leader was saying. The main message that Farage’s team wants to project is that their man put himself “at the head of the Eurosceptic movement” in Britain. And he probably did; just as Clegg effectively projected himself as head of the pro-EU side of the debate. That’s what they each wanted. In all likelihood, very few minds were changed yet both sides go home satisfied.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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The global shipping slowdown hints at a recession around the corner

Instability in China and tumbling commodity prices have devastated the world’s freight providers – a strong indicator of trouble to come.

This is beginning to have the feel of 2008 all over again. Policy makers around the world are in denial once again as global stock markets dive. In 2008, the slowing of the world's biggest economy – the US – sent the global economy into a tailspin. The concern now is that the slowing of the second-largest economy, China, may well have similar global effects. Chinese growth, which averaged 10 per cent for three decades through to 2010, has decelerated for five straight years and in 2015 slowed to 6.9 per cent, its lowest rate in a quarter of a century. The IMF is forecasting that Chinese growth will slow further to 6.3 per cent in 2016 and 6 per cent in 2017, which may well be overly optimistic. There is already speculation that China’s banking system may see losses even larger than those suffered by US banks during the last crisis.

The bad news from China appears to have already spread to the US, which has seen GDP growth slowing sharply in the last quarter of 2015. US industrial production and core retail sales are both falling, and there have been marked contractions in core capital goods shipments and private non-residential construction. Business fixed investment declined nearly 2 per cent last quarter. Despite the bad news, last week Federal Reserve chair Janet Yellen astonishingly claimed that “the US economy is in many ways close to normal”. By contrast, Ruslan Bikbov from Bank of America Merrill Lynch calculates that there is a 64 per cent probability the US is already in recession. My expectation is the next move by the Fed will be to cut rates.

Company profits are tumbling as commodity and oil prices decline. BP reported a $3.3bn fourth-quarter loss last year while Exxon Mobil reported a 58 per cent fall in its quarterly profit. It isn’t just oil companies. Last week, Rio Tinto – the world's second biggest mining company – reported profits down 51 per cent after commodity prices collapsed amid slowing growth from China. Company profits are also suffering due to a big decline in the amount of freight being moved, especially to and from China. Moeller-Maersk, the Danish conglomerate and the world’s biggest container-ship operator by capacity, last week reported a fourth-quarter net loss of $2.51bn.  

DP World, one of the world’s biggest port operators, also says that global volume has slowed sharply. It reported that volumes at its ports rose by 2.4 per cent last year, compared with 8 per cent growth in 2014. Data provider Container Trades Statistics said this week that Asia-to-Europe trade fell nearly 4 per cent last year. Freight rates in 2015 averaged $620 per container on the Asia-to-Europe trade route. Typically, ship operators need more than $1,000 to break even. In February, the cost of moving a container from Shanghai to Rotterdam fell to $431, barely covering fuel costs. Figures released by the Shanghai Shipping Exchange show that the country’s 20 largest container ports grew by 3.7 per cent over 2014, compared to 5.5 per cent the previous year. The Hong Kong Port Development Council reported that throughput at the port of Hong Kong fell by 9.5 per cent in 2015.  

The Baltic Dry Index (BDIY) – an index of the price for shipping dry goods such as iron ore and coal (oil is wet) as shown in the chart below – is at a record low of 290. It is down 75 per cent since its recent peak in 2015 and down 98 per cent from its peak of 11,793 points in May 2008. The collapse to 772 by 5 September 2008 (a week before Lehman Brothers failed) presaged the global recession and it is falling again. Capesize vessels, which are too big to get through the Suez or Panama canals, had an average daily hire last week of $1,484, compared with a peak of $233,988 in June 2008. Even though there is an oversupply of ships, global demand is collapsing.

The International Air Transport Association (IATA) released figures for global air freight, showing cargo volumes expanded 2.2 per cent in 2015 compared to 2014. This was a slower pace of growth than the 5 per cent recorded in 2014. This weakness apparently reflects sluggish trade growth in Europe and Asia-Pacific. “2015 was another very difficult year for air cargo,” said Tony Tyler, IATA’s Director General and CEO. “Growth has slowed and revenue is falling. In 2011 air cargo revenue peaked at $67bn. In 2016 we are not expecting revenue to exceed $51bn.”

The current contraction in rail freight is apparently reminiscent of the drop that started at the end of 2008 and carried on into 2009. China's rail freight volumes fell by a significant amount last year. According to the National Development and Reform Commission (NDRC), volumes fell by 11.9 per cent, a further increase on the 2014 slowdown, when traffic declined by 3.9 per cent.

In the western US farm belt, grain trains are so abundant you can’t give one away. Since the middle of last March, carloads of agricultural products, chemicals, coal, metals, autos and other goods have declined every week. Shipments of US coal, the biggest commodity moved by rail, declined 12 per cent in 2015, according to the Association of American Railroads. The cost of carrying spring wheat from North Dakota to the Pacific coast has dropped by a third in the past two years. In early 2014, grain companies with a train to spare could command $6,000 per car above the official railway tariff, traders say. Today, to avoid hefty contract cancellation fees, they are paying others to use their unwanted trains.

Manufacturing output in the UK fell for each of the last three months and is down 1.7 per cent over the year. The overly optimistic Monetary Policy Committee is forecasting GDP growth of 2.2 per cent (2.4 per cent) in 2016; 2.4 per cent (2.5 per cent) in 2017 and 2.5 per cent (2.4 per cent) in 2018 (the latest, broadly similar, OBR forecasts in parentheses).

So all is well then? Probably not. Mark Carney has run out of ammunition with the Bank Rate at 0.5 per cent, compared with 5.5 per cent in 2008, and has little room to manoeuvre. Negative rates and more quantitative easing, here we come. George Osborne has never explained what he would have done differently in 2008 – his plans for a budget surplus are already in disarray as the economy slows. I am not saying a recession is going to happen any time soon, but it well might.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire