EDITORIAL : THE GUARDIAN, UK

             

 

The economy: Flatlining

UK plc has made back the income it lost – nothing more. This does not count as a recovery; it is more of a stabilisation

The following statement sounds unbelievable, yet it is true: yesterday, the GDP report confirmed that the UK economy has essentially flatlined since autumn; David Cameron described it as "good news". The inevitable question arises: what would the prime minister consider bad news? Because even Doctor Pangloss would struggle to greet that grim GDP release with a smile.

The line the government is keen to push about yesterday's report is that the economy grew 0.5% in the first three months of this year. Yes, not everything is picture-perfect, but manufacturing is going great guns, and the service sector is not far behind. And even if the figures show construction falling off a cliff, the statisticians might well be wrong. This is the story that Mr Cameron brought out at prime minister's questions yesterday; the first problem with it is that it is flatly contradicted by the chief statistician at the Office for National Statistics, Joe Grice, who yesterday morning described the economy as having been "on a plateau" since last summer. Yes, national income rose 0.5% in the three months to the end of March – but it slumped 0.5% in last winter's terrible snow. So all that has happened is that UK plc has made back the income it lost – nothing more. This does not count as a recovery; it is more of a stabilisation.

The second problem with Mr Cameron's story is that these figures are disappointing even by the reckoning of his own Office for Budget Responsibility. Just last month, the OBR – which now supplies the Treasury's macroeconomic forecasts – predicted that the economy would have grown 0.8% in the first quarter. There is more behind this than just a clash of numbers: the UK is actually underperforming. Two years out of a recession, the economy should be powering ahead, in a classic V-shaped recovery. Instead of which, the economy is limping along in what looks more like an L-shaped journey.

To reiterate, these figures are for the period from January to March – that is, before George Osborne's austerity programme began in earnest this month. They show the impact of this January's increase in VAT but not the other tax rises and spending cuts that have only just kicked in. This picture then is of an economy already in a perilously weak condition even before Whitehall, town halls and other parts of the public sector started making their biggest cuts. Against this backdrop, many Treasury ministers would be thinking about changing their strategy. Mr Osborne has yet to produce a Plan B – despite calls from the Institute for Fiscal Studies and others. Yesterday, Jonathan Portes, former chief economist at the Cabinet Office, reiterated his call for "scaling back" the "fiscal overkill". Mr Portes worked in a senior policymaking capacity with coalition ministers until recently; his intervention deserves to be taken very seriously.

Instead of which, the government talks about the need for a growth strategy and unveils changes to the planning laws. The problem with this is threefold. One, the greatest threat to the economy at the moment is of insufficient demand – of families not buying things (for fear of job losses) and businesses not investing. Fiddling with what economists call the supply side will not help with that. Two, under Thatcher and Blair there have already been successive "bonfires of the red tape" and all the rest. And three, any payback from these reforms is likely to take a long time to materialise. What is needed now is another shot of government spending, or at least an easing of the spending cuts; but that is a political impossibility, given Mr Osborne's rhetoric that any such thing would be reckless.

Meanwhile, unemployment continues to rise and wage rises are not keeping pace with high inflation. Cabinet colleagues of Mr Osborne report him remarking that the economy is broadly "on the right track". What would he consider the wrong track?

David Petraeus: Born in the USA

Unlike his president, the general is already the closest thing to an all-American hero

David Petraeus, the son of a Dutch sea captain who emigrated to the US after the second world war, has no need to produce his birth certificate to prove that he was born in the USA. Unlike his president, the general is already the closest thing to an all-American hero. The Republican nomination in 2016 could be his for the taking and, to this end, a stint heading the CIA – widely trailed yesterday – would do his political ambitions no harm. Articulate, charming and driven – the 58-year-old can still outrun his marine escorts around Hyde Park – this philosopher king is adept at marketing his own brand.

Whether that story is quite the star-studded success that Gen Petraeus's CV suggests is less clear. Widely credited with turning the war in Iraq around, he was in charge of two disasters, the capture of Mosul in 2003, only to lose it to insurgents nine months later, and the training of Iraq's army, a process that involved the disappearance at one stage of its procurement budget. Neither is the war in Afghanistan going according to the counter-insurgency rule book that he rewrote. He is due in Washington this week to present his plans for the troop reductions which are scheduled for July. The draw down of US troops is expected to be modest and will be spread over a longer period, a reflection of how hesitant the Pentagon are about the territorial gains made in Helmand and Kandahar.

The flaw of the strategy he has been pursuing is a political one. After all this time, there is still no state strong enough to occupy the areas that US troops have been clearing and holding. Local support is tentative and conditional. The handover of US military control to an Afghan one will still mean replacing one set of foreign troops with another. The percentage of southern Pashtuns in the Afghan National Army is small. State-building is proving to be patchy and conditional. And the insurgency always has another card up its sleeve – the mass prison break, the infiltration of the Afghan security forces, the multitude of soft targets. The most potent recruiter for the insurgency is the presence of foreign troops on Afghan soil, and that will not change soon. If Gen Petraeus's move to the CIA means that the policy will be less military-led, and that a clear political strategy will start to emerge, then this is to be welcomed. But no one should be holding their breath.

The other major move expected to be announced today is that of Leon Panetta, the current CIA director, to the position of defence secretary. Robert Gates, who is retiring, served as a senior cabinet member in both Republican and Democrat administrations. The Democrats needed him, but it is also a testament to his experience and realism. Alas, his advice that the US should stay out of Libya was ignored.

In praise of ... Wittgenstein

A newly discovered archive will illuminate his relationships as well as the emergence of his later thought

Solving the problems of philosophy once is quite something, but solving them twice? Now that is unique. After a spell in engineering, the young Ludwig Wittgenstein had his first go, tracing the limits of language to provide a cocksure account of what could be said with any meaning. The rest, said the last line of the Tractatus Logico-Philosophicus, "one must pass over in silence". The author planned to do just that, packing his bags to work in an Austrian primary school. He stopped penning difficult words, and instead published a manual for children about how to spell them. But the meditative itch returned after he noticed the semantics of colour didn't fit with his grand model of meaning. He was soon back in Cambridge, with Keynes writing: "God has arrived. I met him on the 5.15 train." An otherworldly appearance fed this caricature, as did the monastic digs and the band of disciples. Wittgenstein would harangue them to quit the academy and do something useful, like grinding lenses in Omsk. A newly discovered archive from the most devoted of the devotees, Francis Skinner, will illuminate the relationships of the master's "wonderful life", as well as the emergence of his later thought. It uses weird images (beetles in boxes) and off-the-wall questions (can dogs have headaches?) to expose ontological anxieties as mere confusions, produced by entanglement in words. Ill at ease with modern life, he tried dissolving that with language too. Encountering a jukebox at the end of his life, he asked "what, pray, is a juke?"