Look Left – UK growth forecast to be worse than eurozone

We may be out of the eurozone but the UK economy is set to grow by less than all but four EU states this autumn, a new report revealed today, reports Shamik Das.

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• We may be out of the eurozone but the UK economy is set to grow by less than all but four EU states this autumn, a new report revealed today.

The latest European Economic Forecast (pdf) shows that, despite all the problems being experienced on the Continent (see our report here for the latest on the eurozone crisis), the UK picture is even gloomier.

Only Cyprus, Portugal, and the stricken Greece and Italy will grow more slowly than the UK this autumn, with the eurozone as a whole, the European Union and the world economy all set to experience greater growth.

As Will Straw wrote on Left Foot Forward this morning, the gloom isn’t likely to lift anytime soon:

“UK growth for 2012 is predicted to be 0.6 per cent. In addition to the countries listed above, the Netherlands and Hungary are expected to grow more slowly but 19 EU countries will grow at a faster pace in 2012 including Ireland at 1.1 per cent and Spain at 0.7 per cent; unemployment, meanwhile, is expected to rise to 8.6 per cent from 8.1 per cent at present.

“In 2013, unemployment is expected to stay relatively flat at 8.5 per cent while growth will rise to a sluggish 1.5 per cent.

“The Office of Budget Responsibility is currently predicting growth in 2011 of 1.7 per cent, 2.5 per cent in 2012, and 2.9 per cent in 2013 although this is likely to be significantly downgraded later this month.”

While Carl Packman, writing on Liberal Conspiracy, adds:

“Despite all this the UK government is sticking to its guns and committing to “fiscal consolidation”. Financial services are described as “remain[ing] subdued” as is domestic consumption. Exports are affected by too modest output and corporate investment has been restricted by risk aversity in lending.

“The economy today will be defined by a “wait and see” culture in capital spending.

“George Osborne cannot be blamed for what happens in the EU, but a change in tack needs to occur at home.”

As we have repeatedly said, and said again last month, it’s time for a Plan B, such as that proposed by Compass (pdf) – don’t hold your breath waiting on Osborne to listen.

• It’s as grim for our public services as for the economy, with news this week that the creeping privatisation of the NHS continues apace.

Yesterday, it was revealed a private firm, Circle Healthcare, will take over Hitchingbrooke Health Care NHS trust as part of a £1bn, ten-year contract, a move described as “an accident waiting to happen” by Unison’s head of health, Christina McAnea.

The Guardian reported:

“A private company, listed on the stock market, has been given the right to deliver a full range of hospital services for the first time in the history of the NHS, reigniting a debate about the use of business in the health sector…

“The takeover is not considered a full privatisation as the buildings will remain in public hands and the employees retain their pay and pension on existing terms.

“However, Circle is viewed by ministers as a model “mutual” with 49% of its ownership in staff hands. It operates a scheme to allow more shares to be gained through a performance-related rewards system.

“Significantly this allows doctors to take a slice of the profits – and this landmark deal, the government hopes, will lead to other cash-strapped NHS hospitals consider outsourcing their management to private companies.”

So, what do we know about Circle? Pete Jefferys, policy and campaigns officer at the Co-operative Party, exposed some inconvenient truths about the “mutual” on Left Foot Forward yesterday.

He explained:

“Today you will hear repeated mentions of ‘mutualism’ and ‘employee owned’. Indeed, journalists are being briefed that Circle is what ministers regard as a model mutual – a ‘John Lewis’ approach to public services. Circle even provides information, via the Cabinet Office’s mutual helpline, about setting up new healthcare mutuals.

“Circle is not a mutual… Circle Healthcare is minority owned by senior clinicians – not all of the hospital staff – and majority owned by private backers, including major Conservative Party donors. It is a listed business with the primary purpose of turning a profit, rather than delivering benefit to its members (let alone patients).

“To use the term “mutual” in the same breath as “Circle Healthcare” is crass misrepresentation.

“It is a discredit to the century and a half development of the co-operative and mutual movement, which grew from working people pooling their resources to benefit themselves and their communities, intimately entwined with the labour and trades union movements.”

Concluding:

“The coalition’s championing of companies such as Circle, under the guise of ‘mutualism’, is a disservice to the mutual and co-operative movement and a cover for the reality of private sector takeovers.

“Mutual sector leaders are already publically stating the coalition does not have a credible plan to promote mutual businesses, it is crucial that we also expose their “mutualism” agenda for public services as hollow.”

Also this week, we reported the story of improving outcomes under Labour, in cancer and other diseases – so exposing the deceit behind the coalition’s health agenda, and contradicting David Cameron’s rationale for NHS reform.

As Trevor Cheeseman wrote:

“From next year the coalition’s philosophy of tolerating a postcode lottery when it comes to NHS standards will become clearer. They have spent time defining clinical outcomes across a range of important indicators, in something called the NHS Outcomes Framework – but they have dismantled the infrastructure to ensure delivery, and appear to be content for significantly different performance across the country.

“When the battle of over the health and social care bill is concluded, the focus for Labour should increasingly be clinical standards as well as waiting times, where it has a track record of delivery.

“When they take time to look at their own strategy for improving standards, some in the coalition may worry how threadbare it is, and how exposed they will be left when full-throttle market competition takes hold.”

We will have more on the NHS tomorrow morning on Left Foot Forward, including the latest from the House of Lords committee hearings into the health and social care bill.

• For Theresa May, her week, the past few weeks – from the ridiculous cat gaffe on – have gone from bad to terrible to borderline terminal.

She may have the prime minister’s backing (for now), but her credibility, her competence, her career seem shot.

She stands accused of misleading Parliament, has been exposed as a stinking hypocrite – in 2004 she told the then immigration minister Beverley Hughes “I’m sick and tired of government ministers in this Labour government who simply blame other people when things go wrong” – and was last night reduced to relying on the likes of the truly ludicrous Nadine Dorries to defend her on Question Time.

Brodie Clark, forced out as head of the UK Border Agency, is set to take the home secretary to Court over the affair, claiming he was only following direct orders from the Home Office to speed up queues at the border and abandon stringent checks to prevent terrorists and criminals entering the country.

There are many questions for May to answer over the scandal – some 21 to be precise – with home affairs select committee chair Keith Vaz saying:

“The committee is determined to get to the bottom of this serious breach of security. The resignation statement of Mr Clark directly contradicts evidence given by the home secretary to the home affairs committee.

“It also contradicts the statements made since last Thursday which quoted that Mr Clark was solely responsible for the unauthorised relaxation of border checks.”

On Left Foot Forward this week, we reported some of the criticisms of the hapless May, most notably from the Financial Times (£), which slammed her dog-whistle “preference for popular pandering over rational policy”, and pointed out the insanity of cutting UK border staff:

“Cutting UKBA staff by more than a fifth by 2015 will make an intelligent immigration policy less achievable. So will the obstinate view that the only goal of immigration rules is to keep people out.”

And today on Left Foot Forward, George Readings has exposed May’s desperation in banning extremist Islamists Muslims Against Crusades, concluding:

“Forget the ill-judged and probably impossible promise to ban [these groups] – why does the government persist in playing low-speed whack-a-mole rather than taking effective action against HT’s militant offshoot, whatever it chooses to call itself?”

Progressives of the week:

Australia’s Senators, who this week passed a package of 18 bills that comprise the nation’s first comprehensive legislative response to climate change.

As Left Foot Forward reported:

“The clean energy legislative package, known locally as the ‘carbon tax,’ has at its core the introduction of a price on carbon from July 1st 2012…

“The carbon pricing imposes taxes on Australia’s 500 biggest polluters who, according to government figures, are responsible for 60 per cent of the nation’s greenhouse gas emissions. The 500 polluters will pay a fixed price of AUD 23 for every tonne of carbon they release from 1 July 2012, before moving to a full emissions-trading scheme in 2015.

“The scheme is estimated to add around AUD 7.7 billion in revenue in 2012-2013.

“Under the plan, the government is offering compensation to nine out of ten households for increases in costs of living. According to government estimates, average households will see cost increases of AUD 9.90 per week, while the average assistance will be AUD 10.10 per week.

“In a modeling report on carbon pricing in July 2011, the Australian Department of Treasury outlined that Australia’s economy will continue to grow with the carbon pricing mechanism and that its effect will be to slow growth by only 0.1 of a percentage point per year.”

The legislation was passed by the lower house, the House of Representatives, last month, and following this week’s vote by the Senate, will go to the Governor-General for Royal Assent.

Regressives of the week:

The Michigan Republican party, which has managed to insert into a bill designed to prevent bullying an amendment which essentially turns it into a bill in which bullying is allowed if it’s on religious grounds.

As Time Magazine reported this week:

“In an emotional speech on the Senate floor, Democratic Leader Gretchen Whitmer accused her colleagues of creating a blueprint for consequence-free bullying. “As passed today,” said Whitmer, “bullying kids is okay if a student, parent, teacher or school employee can come up with a moral or religious reason for doing it.”…

“In other words, social conservatives believe that efforts to protect gays from assault, discrimination or bullying impinge on their religious freedom to express and act on their belief that homosexuality is an abomination.

“That’s stating it harshly, but it is the underlying belief.

“This belief, however, relies on a warped understanding of religious liberty. Freedom of religious expression doesn’t give someone the right to kick the crap out of a gay kid or to verbally torment her. It doesn’t give someone the right to fire a gay employee instead of dealing with the potential discomfort of working with him.

“It’s also a highly selective conception of religious liberty. The same religious conservatives who applaud the religious exemption in Michigan’s anti-bullying bill would be appalled if it protected a Muslim student in Dearborn who defended bullying a Christian classmate by saying he considered her an infidel.”

See our report on Left Foot Forward for more.

Evidence of the week:

Research by Sheffield Hallam University that revealed 600,000 people look set to disappear from the benefits system altogether across the UK – in many cases becoming reliant on family members for financial support – with their report warning thousands of families face being “impoverished” by the coalition’s welfare reforms.

See Ed Jacobs’s article on Left Foot Forward for more, in particular the impact on families in Wales and Scotland.

The World Outside Westminster by The Grapevine’s Chris Tarquini:

In the world outside Westminster this week much of the focus has been on the eurozone crisis and the political instability in Greece and question marks about the ability of Italy to repay its debt. Much of the focus has been on the leaders of the two nations, the outgoing prime ministers in Athens and Rome. George Papandreou and Silvio Berlusconi.

***

Papandreou made his farewell address to the nation on Wednesday after a week of even more drama than usual in the embattled nation, promising to fight to keep Greece in the euro whilst respecting the terms of the EU bailout.

Civil unrest in the country has grown as the severity of the austerity measures kick in and after losing credibility over his calls for a referendum on Greek acceptance of the terms of the bailout and subsequent u-turn Papandreou was clearly in political trouble. After narrowly winning a vote of confidence in the Greek Parliament the writing was on the wall for his leadership of Greece.

***

Meanwhile in the Mediterranean the man who is loved by some, hated by others and ‘interesting’ to everybody has said he will not stand if and when fresh elections are held after budget reforms pass.

Even after his statement the yield on benchmark 10-year Italian bonds rose above 7%, causing further concern for those worried Italy will struggle to service its debts. It’s a case of thank you and good night for Italy’s larger than life prime minister.

***

Outside of Europe the reality show that is the American Republican Presidential nomination race shows no sign of ending. As Former Massachusetts Governor Mitt Romney still commands a lead in most national polls rival Herman Cain has come under fire for a string of sexual harassment allegations.

Having previously settled out of court with a woman whilst head of the National Restaurant Association, a number of other accusers have come forward. Cain has categorically denied the claims, however his confusing response to the accusations – first blaming Texas Governor Rick Perry’s campaign before switching his ire to a host of other targets have opened up further questions about his suitability for ‘Prime Time’.

Strangely the claims have yet to hit Cain’s poll numbers.

***

Cain’s exploits will not be of much concern to President Obama, however, who has a 43% approval and 48% disapproval rating in the most recent Gallup Daily Tracking Poll. His campaign has repeatedly targeted who they presume will be the nominee, Mitt Romney, though Romney has come in for fierce stick in TV adverts which seek to derail a man being portrayed both as ‘Flip-Flop Mitt’ and a dangerous right winger.

Whether Romney’s seemingly inevitable march to the nomination can be stopped remains to be seen.

The good news for Obama, though, is that union-busting and extreme pro-life initiatives in Ohio and Mississippi have been rejected by voters in those states this week, suggesting some of the more over-the-top measures being pushed by Republicans may be too much of a lurch to the right even for some of their own party.

Ed Jacobs’s Week Outside Westminster:

Scotland:

As Ruth Davidson got down to work as the new leader of the Scottish Conservatives, she faced a difficult week. Warning her party of painful reforms to come, it was reported the bitterness of the leadership campaign had seen many MSPs refuse to do as they were told as Davidson reshuffled her top team.

Responding to her election, the Telegraph’s Benedict Brogan delivered a gloomy prognosis for the Union, writing:

“The plain truth, though, is that her best efforts will not make a blind bit of difference in a debate that has long since moved on from whether the Conservatives can be heard in a country that has despised them since the days of Margaret Thatcher.

“Scotland is on course for a break with the Union that will lead if not to outright independence, then to a much more informal relationship akin to Catalonia’s place in Spain.”

A new report (pdf), meanwhile, dubbed the chancellor’s core economic strategy a “myth” while warning that the euro-zone crisis threatened Scotland returning to recession.

In its leader column, The Scotsman argued there was “little” in the report to give the SNP government “any comfort” either, adding:

“The report itself could have been more forthcoming on policy suggestions rather than its contentious dismissal of key economic concerns as ‘myths’.”

Wales:

The Welsh government formally published its proposals for legislation to be in place by 2015 providing for a system of presumed consent for organ donations.

Publishing the plans, health minister Lesley Griffiths explained:

“The shortage of organs and tissues continues to cause unnecessary deaths and suffering, both to patients waiting for a transplant and their relatives. The Welsh government believes that this legislation will go a long way to increasing the number of organs and tissues available.

“When people die, donation of their organs and tissues is often possible but currently does not happen – not because they did not wish to donate but because they never got round to joining the organ donor register.

“Repeated surveys show that the overwhelming majority of people in the UK and Wales believe in organ donation, but only one in three people in Wales have joined the organ donor register.”

First minister Carwyn Jones, meanwhile, had a stark warning there is simply no more money left for the Welsh government to spend.

Speaking ahead of a summit on the economy and following the news Wales would get an additional £38.9 million as a result of Westminster’s decision to freeze the council tax, Jones concluded:

“We have the £38.9 million I’ve mentioned, we are looking at making a further announcement on capital programmes during the course of this month, beyond that, no. Because our reserves are at the lowest level that they can go, in our view.

“So any money that could be spent in one area of government, any extra money, would have to come from another area. There’s no point saying, well, x number of million can be spent in this area, because we’d then have to see where the money could come from in another area of spending.

“There is no magic money pot.”

Northern Ireland:

Following his election as SDLP leader, Alasdair McDonnell, set himself a 100-day deadline to begin turning his party’s fortunes around.

Addressing the issue of the Good Friday Agreement, he used his victory speech to deliver a stark message to Sinn Fein and the DUP, declaring:

“We helped arrive at an agreed Ireland in 1998. The two parties that are now in power have turned that agreed Ireland and tremendous opportunity into a grubby little deal – they are like Afghan warlords dividing up the spoils.”

There was a warning, meanwhile, that Scottish demands for Holyrood to gain powers over corporation tax could stop in its tracks moves to do just that in Northern Ireland.

Speaking to a committee of the Scottish Parliament, Dr Graham Gudgin of Cambridge University explained:

“My information, which I think is very reliable, is that the Tory-led coalition will not devolve corporation tax to Scotland under any circumstances. If Scotland keeps pressing this, the most likely outcome is that they will retire from this altogether, and Northern Ireland won’t get it as well.

“There’s quite a responsibility, I think, on the Scottish government. You could damage Northern Ireland quite a bit.”

And deputy first minister Martin McGuinness warned yesterday the UK government’s cuts were having a “damaging effect” on the Northern Irelands peace process, as Kevin Meagher reported on Left Foot Forward:

“Speaking to the Irish Post, the Sinn Fein politician blasted UK ministers for failing to deliver promised investment in infrastructure projects in order to tackle the chronic, generational unemployment across Northern Ireland.

“This is having a “damaging effect” in terms of “people’s perceptions of whether they are benefitting from the peace process” he says.

“The effects of spending cuts are exacerbated by David Cameron’s lack of interest in Northern Ireland, with frequent complaints from within the Executive that Northern Ireland’s ministers have found it markedly more difficult to engage Downing Street directly since the general election.”

This week’s most read:

1. Cameron and Osborne want the unemployed to work for £1.78 an hourAlex Hern

2. Worst Student Tories Ever Faceoff: Oxford Tories 2011 v Bullingdon 1988 – You decideAlex Hern

3. What has Europe ever done for us? Well…Tony Burke, Unite

4. Osborne starts to panic about the chance of a Robin Hood TaxOwen Tudor, TUC

5. How the Tories’ fake co-op friends are biting a chunk out of the NHSPete Jefferys, the Co-operative party

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