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07 - 13 Apr , 2012
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UK Heading For Double Dip Recession
by SHAHED SADULLAH
UK Heading For Double Dip Recession

If what the Paris-based Organisation for Economic Co-operation and Development (OECD) has said is true, the Tory-LibDem coalition government in the UK could be heading for the sort of time that Saeed Ajmal gave to English batsmen in Dubai and Abu Dhabi.
For the much respected OECD, set up as far back as 1961, has come out with what most of us in Britain knew or feared, depending on one's political colours, namely, that the UK is back in recession and that the much dreaded "double dip" has, for all practical purposes, happened. British papers have somewhat cussioned the news by saying that the OECD study indicates that the UK is 'headed' for a double dip recession, not actually there yet, but the country has been heading that way for the past three years. The economic thinktank made the further gloomy prognosis that among the world's largest economies, the British economy would be the slowest to recover in the first half of the current calendar year. As things stand at the moment, the word 'recover' in an economic context is one which even Tory newspapers have stopped using.
The OECD report said that UK output declined at an annual rate of 1.2 per cent in the final quarter of 2011 and will decline at an annual rate of 0.4 per cent in the first three months of 2012. That very sobering forecast was apparently supported by the Office for National Statistics (ONS) in the UK when it reported a bigger fall in output during the final quarter of 2011 than originally estimated. The previously estimated 0.2 per cent fall in output was actually 0.3 percent, the ONS said. It also said that Germany and France, will race ahead of the UK in the first half of the year.
Unemployment in the UK has risen for the last year, in contrast to the US, which has maintained several large scale public spending programmes to promote employment and maintain consumer and business confidence. The US is expected to grow at 2.9% in the first quarter and maintain that level of growth through the summer months, according to the OECD.
There are those (read Tory supporters) who feel that the OECD is unduly pessimistic and that Britain may yet avoid the dubious distinction of a second recession, but they do not have to wait long to find out. In about three weeks' time the ONS will be publishing it's own figures for the projected GDP growth during the first quarter of 2012 and if it reads like a piece of pornography (as most expect it too) then the UK's ignominous entry into its second recession will have been confirmed. What consequences that will have on the market remain to be seen. As things are, confidence in the market is about at par with the confidence most Pakistani cricket fans have on Pakistan's opening batsmen.
The main consequence of an official confirmation of Britain's slide into a double dip recession will be political. The Tory-LibDem coalition will have some very tough questions to answer and some very unflattering deductions about their competence to counter.
The government has not had a good time of late. The budget which hit pensioners and favoured the top tax bracket was a disaster; there is at the moment a scare about petrol shortages with tanker drivers threatening to go on strike and long queues at petrol stations up and down the country. The panic was started by a Tory cabinet minister who advised people to fill up their jerry cans as a means of preparing for any impending shortage of petrol. That ill-considered advice started panic buying of petrol and in any case, was swiftly countered by motoring organisations who said that the last thing people should be doing for security reasons is filling up jerry cans, all of which made the minister sound considerably less than intelligent. And it is not for the first time that a question would have risen on the government's intelligence and competence. In fixing the level at which child support would be discontinued they made an error of which the average schoolboy would be ashamed when they said that no household would receive the benefit if any member was in the higher tax bracket. You need to earn about £343,500 to be in the higher tax bracket and that meant that a home where a man earned say £344,000 and his partner was not working would not qualify for child benefit whereas a home in which both partners earned £340,000 each and therefore had a combined income of £380,000 would get child support. The double dip would mean that the Tory government's insistence on decreasing the deficit in disregard of everything else was not the UK Heading For Double Dip Recessionway to go and the Prime Minister and the Chancellor have both staked too much on their economic plans to find a way out of that without having their faces plastered with a considerable quantity of political egg.

Galloway's Victory
The fact that disillusionment against the government is growing was proven (if proof was at all necessary) by a stunning result at a by-election in the Pakistani/Azad Kashmiri dominated Bradford West consistuency, where former Labour maverick and now head of the Respect Party, George Galloway, won an absolutely unexpected victory. In what has for generations been considered a safe Labour seat, he secured a crushing 36.59 per cent swing against Labour to beat the Labour candidate Imran Hussain by 10,140 votes which in terms of British politics is a smashing win. The Muslim community, traditional Labour supporters, appear to have forsaken Labour en masse in support of Galloway's popular call for an immediate British troop withdrawal from Afghanistan and a promise to fight against any attack on Iran.
The result raises wider questions over whether it is a simple one-off reflecting the widespread Muslim support for Galloway's pro-Muslim stance on international affairs, or a sign of a broader disillusionment with mainstream political parties. Perhaps there is a message here too for the pretty boy brand of politics where the most important thing is not what the politician says or does but how he, his wife, their kids and perhaps even their dog look in a photograph. Galloway, who is 57 and would never be mistaken for a movie star, claimed that he was there for the long term, adding that the main parties would get a shock when Respect stands in the neglected towns of the north in the local elections in May.
Neither the Tories nor the LibDems would be looking forward to that date. The Tory candidate in Bradford West managed just 8.37 per cent of the vote or 2,746 votes, down from 22.78 per cent or 12,638 votes in the last election, while the LibDems who had come third in 2010 with 11.7 per cent of the vote (4,732 votes), came fourth this time with only 1505 votes or 4.59 per cent of the vote. Galloway polled 18,341 votes while Labour got 8,201.
Sooner or later the coalition government will have to come up with something new on the economic front. The political life of their dogmatic mantra on deficit reduction could be fast running out.


 
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