A volunteer, right, gives bags of groceries to a family at a food bank in St Luke's Church in West Norwood, London. More people are struggling to feed themselves as austerity measures hit the poor.
A volunteer, right, gives bags of groceries to a family at a food bank in St Luke's Church in West Norwood, London. More people are struggling to feed themselves as austerity measures hit the poor.

UK economy braced for 'triple dip'



LONDON // Some people say that recession is just a word - but in Britain there are fears that it could become a habit. And a dangerous one at that.

It is possible that official figures for first-quarter economic growth, due to be released today, could put the country back in recession, and tension is building.

Although the average prediction from economists is for growth of 0.1 per cent on the quarter, they have warned that it would take the smallest statistical variation to shift the figure into negative territory. That would place the country in recession, which is technically defined as two consecutive quarters of economic contraction.

Another recession - the third since the 2008 financial crisis - is already being referred to with foreboding in the media as a "triple dip". Experts warned that it would create a wave of negative media attention that would scare consumers away from spending, feeding into a vicious cycle that has the economy flat-lining.

"It's psychological - this is all psychological," said Cary Cooper, a professor at Lancaster University Management School. "It's about the message that those figures send to consumers and small businesses."

The government desperately wants a strong growth figure to justify its increasingly criticised policy of painful spending cuts.

But recent indicators on Britain's economy, the third-largest in the 27-country EU after Germany and France, have been disappointing.

Inflation is rising, cutting into standards of living. Unemployment is up. Two international ratings agencies have downgraded the country's credit grade from the top level AAA, warning about the government's fiscal policies.

The government, which has long played on its AAA rating as a sign of its economic might, has been pursuing a harsh programme of spending cuts and tax increases to reduce the budget deficit which, at 7.4 per cent of annual economic output, is more than twice the EU's 3 per cent limit.

Like many governments across Europe that have been scarred by the bond-market turmoil that forced Greece and four other countries to seek, rescue loans, Britain's ruling coalition is focusing on cutting debt quickly, even at the cost of short-term economic pain.

What some governments and economists are slowly realising, however, is that they may have underestimated the extent of the damage such austerity would do.

There's long been pressure domestically in Britain to ease off the budget cuts, but in the past few days the International Monetary Fund has also chimed in.

The IMF, which is involved in all of Europe's sovereign bailout programmes, has put pressure on the UK's treasury chief, George Osborne, to slow down the austerity measures in hopes of reviving the economy.

As the debate rages on, even the head of the Church of England - the Archbishop of Canterbury, Justin Welby - has waded in and used a word no one wants to hear: depression.

Archbishop Welby previously served as an oil industry executive and now sits on the parliamentary banking standards committee.

He told an audience at the heart of government in Westminster on Monday that there was an issue of confidence and trust - and there is a need to rebuild both.

"I would argue that what we are in at the moment is not a recession, but essentially some kind of depression and it therefore takes something very, very major to get out of it in the same way as it took something major for us to get into it," he said.

The Bank of England has cut interest rates to record lows and pumped money into the financial system in the hope that this would encourage banks to lend money more cheaply. But the results have been mixed and experts say there is only so much a central bank can do to create jobs.

Even if the economy dodges recession today, the daily reality for many Britons remains tough.

The Trussell Trust, a network of food banks, said it fed more than 350,000 people in the year ending in March - more than double the 128,000 it had helped during the previous 12 months.

Tim Boyce, a retired investment banker who runs a south London branch, said he was seeing the people behind those numbers.

Inside a frosty church that has opened its doors to the desperate, he watches as they come for emergency handouts of rice, pasta and beans.

"Most people don't realise the extent of poverty," he said. "It's hiding in plain view."

Take Kevin Bishenden, 50, and his wife, Nicola, 40. He's an upholsterer who says that no one wants to hire someone his age. She says she just can't find work. The only reason they aren't homeless is that Britain's welfare state manages to keep a roof over their heads.

But they've slowly been selling all their possessions, together with memories of a past life. First a bike, then kitchen items. All the DVDs are going. They've already sold their wedding rings.

He lamented an additional council tax payment of £15 that came into effect as part of the government's austerity plans. His exhaustion was clear as he tried to imagine how they might pay it.

"Where's that supposed to come from?" he asked.

Company Fact Box

Company name/date started: Abwaab Technologies / September 2019

Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO

Based: Amman, Jordan

Sector: Education Technology

Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed

Stage: early-stage startup 

Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.

Three tips from La Perle's performers

1 The kind of water athletes drink is important. Gwilym Hooson, a 28-year-old British performer who is currently recovering from knee surgery, found that out when the company was still in Studio City, training for 12 hours a day. “The physio team was like: ‘Why is everyone getting cramps?’ And then they realised we had to add salt and sugar to the water,” he says.

2 A little chocolate is a good thing. “It’s emergency energy,” says Craig Paul Smith, La Perle’s head coach and former Cirque du Soleil performer, gesturing to an almost-empty open box of mini chocolate bars on his desk backstage.

3 Take chances, says Young, who has worked all over the world, including most recently at Dragone’s show in China. “Every time we go out of our comfort zone, we learn a lot about ourselves,” she says.

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
McLaren GT specs

Engine: 4-litre twin-turbo V8

Transmission: seven-speed

Power: 620bhp

Torque: 630Nm

Price: Dh875,000

On sale: now

Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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Second Test

In Dubai

Pakistan 418-5 (declared)
New Zealand 90 and 131-2 (follow on)

Day 3: New Zealand trail by 197 runs with 8 wickets remaining