25/01/2013 Newsnight


In-depth investigation and analysis of the stories behind the day's headlines with Emily Maitlis.

Similar Content

Browse content similar to 25/01/2013. Check below for episodes and series from the same categories and more!



Triple-dip recession? Full on depression? The economy shrinks


again. Is the Chancellor's plan shot?


Out in the real world, one of life's strivers confronts the


elephant in the room. All the bills are rising and we're not getting


any extra money ourselves. What do you do? I'm a builder by trade.


is that? Slow, very slow. Even London's mayor tells the


Chancellor to junk talk of austerity. Is it time for a re-


think? We ask the Government? Also tonight, we will have the


latest from Mali, Steve Hewlett's there.


As the Islamist rebels threaten to ban music in Mali, we talk to the


musician who has gathered musicians together to sing about peace in


their country. The German comedian, tells us what


he would miss if we left the EU. sir talgia, before I moved to


Britain, I didn't know how to goose step, if it wasn't for the BBC, I


still wouldn't know. Good evening, flat, stiing nant and sluggish,


that is the optists. The rest are warning the economy faces a triple-


dip recession, the first the country has seen in modern time.


The latest figures show the country's economy shrank by 0.3%,


numbers that lin crease the pressure on George Osborne to come


-- will increase the pressure on George Osborne to come up with a


Plan B and make it grow again. Arguably the biggest name in the


Conservative Party called for the Chancellor to junk talk of


austerity and crack on with major building projects to revitalise the


economy. First, Paul Mason has been in Gravesend to see what it means


close up. In a parallel world, where


everything had gone right, Britain's trade routes would be


awash with exports. Its high streets would be buzzing. Its


manufacturing would be out of trouble. But they are not. One


negative quarter is not a disaster, but what we are seeing here is the


failure of a plan, the Government thought by now the economy would be


well down the path of what it calls rebalancing. Away from reliance on


state spending, and consumer spending, and towards manufacturing,


and exports. That is just not happening fast enough.


This is the third time growth has dipped below zero since the Lehman


Brothers crisis. This time it has been driven by a 1.5% fall in


manufacturing, combined with a one- off dip in oil production to take


overall productive industries down by minus 1.8%. This was the first


set of figures for two years, where Government spending fell as a


driver of GDP, by 0.7%. So, overall, for the past 12 months, the economy


has grown by a big, fat zero. And on the streets of Gravesend, in


Kent, a town that boomed once, but now is not booming, they have


noticed. Dire, I'm not working at the moment,


I haven't been at work for the past month, no work. What are wages like


when you do work? It goes up and down doesn't it. It depends where


there is work, if there is work somewhere sometimes tough take it


if it is a little bit less money. That the voice of a carpenter, this


of a pub landlord. Does it feel like a triple-dip recession? Yes,


very bad. Why? The pub is bad, trade is gone, no wages. What are


you doing in the costume? Trying to boost trade. Everyone is waiting


for the pay packet, as soon as it is in it is gone on bills, no


luxury money. What about you? feel the same, no spare money,


everything goes on bills, electric has gone up again. It is constantly


rising and nothing's going up in the money, all the bills are rising


and everything like that, we are not getting anything extra


ourselves. What do you do? I'm a builder by trade. How is that?


very slow. When it comes to green shoots amid all of this, economists


can't see many. If you look at where the source of demand is


coming from in the UK, it is not coming from consumers who are


seeing their real wages eaten in to by inflation, it is not coming from


banks, which are deleveraging, or the Government in the middle of


implementing austerity measures, it is not coming from the global


economy either. It is not surprising at all that the UK


economy has gone back into stall speed and may dip into recession


again. When it comes to long periods of suppressed growth, there


is a word for it, depression. This was the shape of the last


depression, output falling from 1930, but back up in positive


territory by the start of 1934. Now, here's what we have lived through,


shallower, but now 12 months longer and leaving the economy smaller


than it was five years ago, and nowhere near getting back into


positive territory. It is a reminder that Britain face as very


tough economic situation. It is a reminder that last year was


particularly difficult, both with the problems we have at home,


dealing with the debts built up over many years. But also, frankly,


the problems in the eurozone, where many of our exports go, which is is


now in recession. We can either run away from those problems or


confront them. I'm absolutely determined to confront them, so we


can create jobs for the people of this country. The Chancellor had


prepared for today's news by eating pizza, in Davos, with friend "Dave"


and rival "Boris". The London mayor made a speech calling for the


Government to junk the rhetoric of austerity and be confident. As for


the opposition? We need action now to kick start the recoverry, a


temporary VAT cut and bring forward public investment. As Nick Clegg


said yesterday, get houses built and people back to work, boost


confidence and get demand moving. I'm afraid it looks as if we will


have the Government trying to laugh off what is happening in the


economy. That is not good enough. In the search for answers,


attention is turning to monetary policy, could the Bank of England


start targeting, not inflation, but the rate of growth in Britain's now


frozen factories and ports. Canadian Martha Kearney takes over


at the bank in July, d Mark Kearney, takes over the bank in July, some


want that to start a re-think. Should they use monetary policy and


the ability of the Bank of England to create money, in different, more


aggressive ways, which means that money goes directly and powerfully


into the economy. The arrival of a new governor, who certainly is


thinking about these sorts of issues, and is aware of these


challenges, is, I think, the ideal occasion to re-think the strategy


we have been following, which seems to me obvious is not working.


causes of today's dip are a mixture of external conditions and domestic


ones, but policy is the one thing you can control. You can, if you


want, blame the euro crisis, and austerity here, but ultimately


today's policy comes down to this. If you say you are going to


rebalance the economy, and promote growth, using Government policy,


you actually have to have a policy and it has to work.


For now, George Osborne is sticking to his policy, though mutterings in


the coalition and his party are getting louder.


Joining me now is David Gauke, the Exchequer secretary to the Treasury.


You must be incredibly disappointed? Obviously we would


want stronger growth than in 2012, 2012 is a difficult year, for the


UK and other places as well. In fact, the numbers we have seen


today are broadly in line with what the Office of Budget Responsibility


said last year. If you look over 2012. So not surprising, not really


disappointing at all? The fact that the economy contracts in the last


quarter of last year is not a big surprise. And there was no growth


last year. Clearly we would want growth. The question is why is that


happening and what can we do to get growth in the future. The reason


why it is happening is we have the eurozone crisis, we have commodity


prices higher than we would like, and we have been dealing with the


aftereffects of the financial crisis of 2007/08. You could


mention the snow if you need more reasons! That is not what the


Government has set out but the Office of Budget Responsibility has


set out why we were struggling this year. You have managed to achieve


something remarkable, you have put the economy into reverse three


times, we are heading for a triple- dip recession? The Office of Budget


Responsibility predicted that the last quarter of 2012 would be a


contraction, they are predicting that the first quarter of 2013, the


economy will grow. This is your policy? That is the point I was


making a moment or so ago, the reasons why the economy has gone


through a difficult spell are because of these particular factors,


how do we get growth? I don't believe that borrowing more money


is the solution to those problems. What we want to do is make sure


that we get lending through to businesses. When you listen to


those voices in Gravesend, people saying there is no spare money, the


bills are constantly rising, there is no trade, there is no wages, the


whole point of your plan for austerity is it was meant to be


offset by growth, that of the policy, and the policy has failed?


The reasons why growth has been disappointing over the last two


years. Disappointing, there has been nothing, it has not grown?


has been disappointing for the very reasons I have set out, the


question is how do we get that growth. The answer isn't more


borrowing that puts at risk higher interest rates, the answer is to


try to get rid some of those regulations that hold back


businesses, it is about getting money through to businesses, with


the funding through lending scheme, it is about switching spending to


infrastructure, capital spending. Things like science, David Willetts


was on this programme last night setting out what we are doing.


Within your own Government and your own party Nick Clegg has admitted


those capital spending cuts were a mistake. You have heard from Boris


Johnson, the biggest name in your party, saying junk the austerity


talk. He's telling the Chancellor to do is. Is there a Plan B now?


is absolutely right that we made the case why we had to take very


difficult action to deal with the deficit, we needed to make that


case. We still need to make that case. You haven't dealt with the


deficit, it has actually increased? It is 25% lower than it was. It has


increased in the last 12 month. is lower than it was when we came


into the office. It increased in the last 12 months, that is where


you are? The Office of Budget Responsibility predict the deficit


will continue to fall, but we will wait for the time of the budget.


The reality is, if we had not taken difficult decisions on spending and


tax, we would have a deficit still in similar terms to where we were


two years ago, and that would have put our credibility at risk. Most


people hearing this, you are talking about credibility and the


credit rating, most people will say we don't care about that as much as


we care about growth. We need to see things happening in the economy,


this is what we feel, every day in our pockets, when do you say, do


you know, we got it wrong, time for a U-turn? I tell you why it matters,


it matters because we don't have that credibility, we will see


interest rates rise, we will see mortgage rates rise, we will see it


harder for businesses to get access to finance. So there will be no


concession to what is going on now? That is damaging for the economy.


You are sticking rigidly to this plan, there will be no turn? It is


vital that we are determined to bring down the deficit, but


alongside that, we have to continue to do. It is credibility over


growth, bluntly? Not at all. That is where we are? There is no


tension between the two. A precondition for growth is


credibility. There is a tension between the two, that is what you


are told, Boris Johnson has said we cannot risk losing confidence, it


is time to junk talk of austerity. The IMF has said if things don't


get better we need to do austerity slower. Jim O'Neil has said the


same, the head of Goldman Sachs, are these voices not credible?


need to demonstrate a show of getting our public finances under


control, we need to put in place and impli mate the policies we have


announced. About support for conditions and infrastructure and a


competitive tax system it, those are the steps this Government is


taking to ensure we get the long- term growth. There is a very clear


desire and strategy by this Government to get growth. But the


idea that the solution to these problems is if we borrow �160


billion a year, that all those problems go away is nonsense.


Great to have you here, if you can hold on we can talk to France


O'Grady, the General Secretary of the tuck, and -- TUC, and the


former member of the Monetary Policy Committee. What do you make


of what we have just heard, France O'Grady, that the solution is not


just to borrow more and make cuts? The Government's austerity policy


has lost all credibility. Frankly, last time we heard a Conservative-


led Government say there is no alternative, it didn't end well. We


have got zero growth, austerity is faileding, and employment is still


far too high, -- failing, and employment is far too high, with a


quarter of all young people long- term unemployed. Real problems with


ordinary working people suffering the third year of real pay cuts. We


have sucked demand out of the economy. Business confidence is low,


because consumer confidence is low. People haven't got money to spend.


It was good to hear Nick Clegg say sorry for cutting �22 billion off


capital investment, but he also said people need money in their


pockets. In which case, why have a 1% cap on benefits and wages, let's


look at wages-led growth, a good industrial policy, and some jobs


for our young people. Marina Bell, what is the answer? I think the


important thing for credibility is that fiscal consolidation,


austerity happens, with regard to what is going on in the economy. So


that over the cycle, and when the economy recovers, plans are in


place to bring the cyclical adjusted current budget deficit


back into balance. That is a plan we have, but with a rolling five-


year horizon. It should be contingent on where the economy is,


and the target to stablise debt as a percentage of GDP, should also be


subject to the economy getting back to trend. We shouldn't try to


achieve these targets in too fast a time frame. You would agree that we


should slow down? Absolutely. Bluntly France O'Grady, you have to


the -- bluntly Frances O'Grady you have the minister here what do you


want? We want a policy, led by the Prime Minister, that you need to


re-think austerity parties, making ordinary working-class families


poorer is not -- working families poorer is not going to make the


country grow. We need demand back into the economy, and the best way


to do that, there is lots of evidence on this, is to put money


in the pockets of working people and the poor, because they spent it


in the local economy. Where as the rich, tend to save or shove it off


to tax havens. So you need to start being fair, you need to start


investing for the future, we need to get our infrastructure moving.


You need to get some real reform of the banking system, because they


put us into this mess, they need to be reformed in order for us to get


out of it. Is what you are hearing, and we will put this to the


minister in a second, realistic, and what do you expect Mark Kearney


to do when he comes in, should the Bank of England have more powers


now? The bank has been given an incredible amount of power.


terms of bank regulation, for example, do you think they will


take that bull bit horns? I would hope that in terms of bank


regulation they will go a little bit easier in the prudent policies


of raising capital ratios. I think the irony of the situation we are


in, is policies that would be prudent in other times likely


borrowing, balanced current account budget, high capital ratios, are


not the sort of things you should be putting in place in the teeth of


a recession. So I hope that there will be a slowdown, perhaps, in


pushing up the capital ratios. I would hope that the Government and


the banks stick with targeting inflation. Mormonry, as we heard in


the film, more aggressive -- more monetary policy, as we heard in the


film, more aggressive monetary policy may be required. There are


signs in the last few months that the healthy levels might be


reversing. Let's put some of the blunt things


people are talking about now, a cut in VAT, a cut in national insurance


contributions, are these the things that we are going to see in the


March budget, should we? Not if we can't afford them. That is the


challenge. It is all very well, and I heard Ed Balls today saying we


should do all this, we should cut these taxes and spend more into


this area. What that would result in is more borrowing, I'm afraid


that is...You Are already spending more on the welfare budget because


more people are out of work and suffering? For the reasons I


outlined earlier, these are difficult times for the economy,


there is that flexibility within our current plans, that may happen.


The idea of a stimulus, that we choose to enter into, is just more


borrowing, and I'm afraid, the answer that we get from Labour all


the time is borrow more. That's always their answer, that is what


they do in Government as well. don't want to taper cuts at this


point? The difficulty if we try to go for revering things, if we try


to go for -- reversing things, if we try to go for big tax cuts we


can't fund from elsewhere, we can't and we find interest rates going up


and you take more money out of the economy. This is full steam ahead,


Plan A, nothing has changed as of today? The strategy of getting the


public finances under control, while at the same time taking some


of the difficult decisions to ensure the UK can grow is the right


approach, it is not going to always be popular, there will be


resistance to it, and it's not easy when the world economy is going


through some of the challenges it is at the moment. But it is the


right approach for the long-term for this country.


Thank you. A British surveillance plane has


taken off to support French military prayings against shraelist


rebels in Mali, earlier today -- Islamist rebels in Mali, earlier


today planes bombed positions, and a town has been retaken. We spent


the day in Bamako, I I asked what the mood was like there? The first


thing that strikes you here is the sheer sense of relief that everyone


I have spoken to feels. They have been saved by the French from all


the problems they foresaw, if the Islamists had come here. This is a


very poor country, of course, but a country that is very rich in


culture, with a fairly easy going form of Islam, very famous for its


music and other forms of culture. People, of course, heard all the


news that was happening in the rebel-controlled north, all the


punishments, for smoking, the punishments for women who were


unveiled, and the amputations for theft, they were terrified that


would come here. The problem now is the sheer weight of expectations


that are being put on the French. People not only expect the French


effectively to liberate the whole country from the Islamists, but


they also want the French, their former colonial masters, who


achieve some kind of political fix here, to reintroduce democracy, and


even a better form of democracy than people had before the French


left. Whether the French really have the appetite to sort all that


out is very much open to question. What does that mean for the


operation, how long do the French have to be there? Well, the


operation to drive the Islamists back is proceeding fairly steadily.


At first, with French air strikes, then French Special Forces, and


then the malian army behind, that but the really big fight, foit in


the desert, the fight for the two many Islamist-controlled towns,


Timbuktu we don't know where that will go. We don't know whether or


not French public opinion will change. We have heard of reprisal


killings by the Mali army. That is France's main ally. What is


supposed to happen is that behind the French are supposed to come


these contingents of west African forces from Nigeria, Togo, Ivory


Coast and so on. But even a special adviser to the mally President said


to me today that he -- Mali President said to me today he


wasn't sure if these forces could cope in unfamiliar terrain. It was


kite-flying under the Taliban, ballroom dancing under Mao, history


under Pol Pot, the first impulse of a dictator is to control the people


under the freedom it bans. If the Islamists of west Africa get their


way, the next addition to that will be music in Mali. Enter the mally


musician who has gathered 40 musicians to sing in their country


and against the imposition of Sharia Law. Nowhere does music have


political importance than in the vast desert state of Mali. Now in


exile in southern France, she talked to Steve Smith.


At a sound check for a concert near Marseille tonight, it is rising


star Fatoumata Diawara. But her thoughts are 2,000 miles away, with


the conflict in Mali? I decided to go in Mali in the summer to do the


holy day. People said don't stay in Mali, you have to go back because


you are in danger in Mali now. I said, OK, so it is time to do


Can you tell me about this song you have recorded with the other


musicians from Mali? Every artist expresses themselves about how they


are feeling, the first one is peace, the second one it is about uniting,


between our brothers from the north and the people from the south. As


musicians we needed to express that, talk about reality, be a voice of


those people. Music is very important, more important than


politics. Also we have a very bad situation, very bad politics kal


situation now. And the people really -- political situation now,


the people really need some hope. We know many shocking things are


happening in Mali at the moment, there is mistreatment of musicians,


we have heard of instruments being confiscated, recording equipment


smashed? It is also one of our fights to protect our music. In the


last few minutes months music is in danger in mal-- the last few months,


music is in danger in Mali, the Islamists want to stop music.


what we understand, some of the people in the north, the Islamists,


regard music as wrong and yet it is a vital part of your country's


tradition, isn't it? I don't know which kind of music they want. They


want us to sing only about God. So we can't do that. We can't do that.


We needed to express ourselves, we need to express the many problems


of Mali by music. We do everything by this. Politics, everything.


condition of women, you sing about that? Emancipations, you know.


That's the way that I decided to talk to my generation, by music. I


have this kind of writing, very new for my country, and the people are


very receptive of that, they love that. My generation like my kind of


writing, because it is more direct. If I stopped that, what are we


gonna do, what will we be? We will lose everything. Our soul, our


culture, our ancestoral gifts. Our spiritual things, the spirit of


Mali is music. You were in the country recently,


what is happening with your family, and your friends, how are they


while this is going on? We don't know what is going to happen


tomorrow. Politic cleel we don't have anybody who can -- politically


we don't have anybody who can really help us. That is the second


problem, very important now. To really make us a very sad. I have


many friends who are artists, who play on the records, very great


artists in Mali, nobody has gigs now. We can't play. You can't play


at home? No. Because it is too dangerous? It is very dangerous. We


can't have a kamikaze to come and explode everything. We are very


worried. Every artist is really happy to do this project, and they


thing, I hope, so it will bring a big hope for the mally people.


Any friends in Europe are good right now, the German newspaper has


run an article begging us to stay in the EU. Listing ten reasons why


Europe needs us. Before we go we offer our own repost, a German


stand-up median gives us a list of what he will miss if we left the


European Union. What does Britain do best, celebrating incompetence,


and a continent of self-deprecation, the idea you can laugh off failure.


It doesn't matter how bad you mess up in your line of work, as long as


you can tell the tale of your underachievement in a funny way.


Britain is all about a great sense of humour, and nostalgia, before I


moved to Britain, I didn't know how to goose step. If it wasn't for the


BBC I still wouldn't know how to. The Dunkirk spirit, it is very


British, but probably not a very good example, if that was all about


Britain getting out of Europe. Then sectarianism, I love sectarianism,


but in Scotland it's brilliant sectarianism, it makes for such


great football. And in a way I understand it is a blight on almost


every other aspect of life, those 90 minutes on a Saturday afternoon


it is worth it. Alcohol, at home I'm an alcoholic, here I'm joly.


Free schools, even if they open with a school with the best of


intention, Ofsted will make them jump through so answer hoops they


will be mental by the end of it T But it doesn't matter, what this


country is all about is tolerance. Britain, very good to us foreigners,


you hole date us. You don't welcome us, you don't welcome us, but you


tolerate us, that is a great British virttu. There is something


you really dislike, but you can't be bothered to do anything about it,


at home we call that lazy cynicism, here it is tolerance. The biggest


problem if Britain leaves the European Union, people in Berlin


will have to pay for more their After Eights, so, please, stay.


Please. There you go, you heard it from


here first. Tonight on Review, Sarah Churchwell,


James Fox and Lionel Shriver join me to talk about four giants,


Abraham Lincoln in the hands of Spielberg, the real Orwell season,


and Turn of the Screw done by Hammer Theatre of Horror, and all