At the looming of the dreaded triple dip

By John Charles Dyer, UK Correspondent 

9 March 2013. The long dreaded “triple dip” GDP contraction looms, a dark ruin rising among leaf bare trees at the unfolding end of a sunken, muddy hedgerow.  The UK lost its prized AAA credit rating last month. Twenty High Street shops close per day. In early March the pound plunged to a new two and a half year low against the dollar.  

While there have been increases in employment this last year, around half of this increase was attributable to part time work for which the median wage was a meagre £155 a week. Total net increases in employment haven’t kept pace with either the annual growth in the persons looking for work or the general population the work must support.   

It is widely anticipated ONS will report in April that GDP contracted yet again this quarter. It would be the realization of the now dreaded triple dip.  

The usual suspects respond as usual 

Yet the usual suspects continue to see what they believe rather than believe what they see. They continue to report as fact statistics later disavowed by the agenies that allegedly produced them.

8 March 2013 both BBC and Sky News reported construction output “unexpectedly” slumped during February to the lowest levels since the mid 1980’s. If the slump continues throughout March the first quarter of 2013 will see the lowest level of output since 1986. In the same report Sky News reported without irony business confidence in the industry nevertheless remains strong.   

5 March 2013 BBC reported new manufacturing orders also “unexpectedly” shrank in February. Again without irony,  BBC focused on business leaders’ expressions of confidence. In its Breaking News analysis BBC continued to cite Office of National Statistics (ONS) reported increases in employment as evidence there are nevertheless signs the economy is turning around despite fears of a triple dip recession, despite conflicting reports from both Whirled View and ITV Tonight. 

7 March 2013 Business Secretary Vince Cable broke ranks (however mildly), arguing for a “Plan A Plus” investment in construction even if such an investment means borrowing to pay for it.  Cable’s Party leader, Deputy Prime Minister Nick Clegg, quickly explained away the Business Secretary’s injudicious lapse. Of course the Business Secretary still agrees with the Prime Minister, the Chancellor and Clegg that there is no alternative to the course the government is already following. Ignore that little matter of “Plan A Plus.”  By the night of the 8th Secretary Cable was once again rounded up and contained.

The same day Prime Minister David Cameron nevertheless pledged to stick to “fiscal discipline.” Cameron argued there is simply no alternative. He rejected calls from his back bench for tax cuts. He rejected Secretary Cable’s “Plan A Plus” investment in construction.  Cameron argued there is “no magic money tree.”  According to the Prime Minister (and the Chancellor) the UK’s loss of its prized AAA credit rating was not due to the failure of the plan but “stark” proof of its necessity.  

But the natives are growing increasingly restlessness 

Even the usual suspects’ usual supporters grow restless.  In the same week Secretary Cable called for Plan A Plus, that most unlikely of rebels, Sir Mervyn King called for the immediate splitting up of Royal Bank of Scotland and sale of the taxpayer’s shares.  It was only the most recent in a growing list of awkward pronouncements from Sir Mervyn on the need for action.  Europe announced plans to institute a cap on banker bonuses, then resoundingly rejected Chancellor George Osborne’s pleas to modify or abandon the measure. 

Things are beginning to pile up on the Prime Minister. 8 March 2013 Robert Chote, Chief of the Office for Budget Responsibility, wrote the Prime Minister bluntly rebuking the Prime Minister for saying the OBR had concluded that the Prime Minister’s Plan A had not hurt the economy. Chote replied it had hurt. It had knocked 1.4% off GDP the past 2 years.    

In Eastleigh Liberal Democrats lost 14% from their previous share of the vote in a by-election for a safe seat.  Conservatives (who had hoped to capitalize on the circumstances which triggered the election) also lost 14% from their share of the vote.  Rumours circulate that Conservative back benchers have warned the Prime Minister he faces a serious leadership challenge in May if things do not turn around.  

There just may be a shift carried on the coming Spring breezes. A reputable poll out today by the Tory Lord Ashcroft suggests that really for the first time in this Parliament an electoraly significant segment of the electorate in critical marignal seats may be disillusioned with the Team Cameron narrative. The poll showed Liberal Democrats holding their own against Conservative candidates but collapsing against Labour and voters shifting to Labour in contests between Conservatives and Labour.

It is time 

It is time the nation soberly reconsider the direction of government policy.  

The Prime Minister, his Deputy Prime Minister and the Chancellor have clearly failed to address the nation’s economic ills. Many would argue they have made them worse. Indeed the Prime Minister brings to mind the physician who treated a patient presenting with sepsis with paracetamol because the patient had a fever, ignoring the sepsis poisoning the patient’s body.  The patient not surprisingly took a turn much for the worst.

The UK economy has reached "condition critical." Some argue there are structural issues with the UK economy that may mean decline is already too deeply entrenched for any short term fix. Rhetoric, strategy, PR technique and self-interest must adapt to reality, not insist reality conform to rhetoric and ideology.  The UK economy and social fabric are in far too serious a condition to leave them any longer in the hands of men who see only what they believe and do not believe what is all-too-plain to see.