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It is not possible to quantify the overall impact of the Olympics and indeed some of the activity may have displaced other activity (for example, the comments on watching the Olympics in preference to films or DVDs).

This growth figure is heartening, but it does little to change the overall impression of a flat UK economy. The economy remains smaller today than it did this time a year ago, and that should be a serious cause for concern. While this quarter's growth corrects for the shallow double-dip recession, it should not be taken as a sign that a strong recovery is on the way.

Today XpertHR publishes the latest statistics on pay settlements, showing that the median basic pay deal was 2.4% in the three months to the end of August 2012.

We also publish a comprehensive review of pay trends over the past year which is based on pay settlements covering more than one in four of the UK workforce.

You can read more on the Pay Intelligence blog.

• XpertHR economic commentary October 2012: A lack of oomph 
  XpertHR's economic commentary for October 2012 reports on the following topics: the Government's new strategy to reboot the UK economy; what might be expected from the Chancellor's Autumn Statement 2012; and the national minimum wage uprating for 2012/2013. We also consider trends in trade union activity in 2012 and beyond, and report the latest readings on key economic indicators of relevance to HR practitioners and pay specialists, including inflation, unemployment and pay awards.

• The UK economy added 236,000 new jobs over three months between May and July 2012. Economist John Philpott says this is "near miraculous for an economy in a double-dip recession." 
• The headline unemployment rate (on the ILO measure) fell back to 8.1% over the three months to July 2012, down from 8.3% in June.
• ONS acknowledges that these figures could reflect "additional short-term employment connected with the Olympics."
  

Digging beneath the totals, the figures show some weaknesses. The majority of the new jobs were either part-time or self-employed. While any increase in employment is encouraging, a full labour market recovery must offer more full-time employee jobs.

The UK and other Western economies are actually suffering due to flexible labour markets rather than benefiting. Wages are not rising and the shift in work from full to part-time means many consumers don't have the same disposable income. Our economies depend on consumption, and this isn't coming about because of the suppression of wages by the working of the labour market.

If the global economy stalls, it will prove very difficult for a stagnant UK economy to buck the global trend. The UK economy is a like a boat becalmed on a lake, hoping someone will come and blow it along. It is little comfort that the UK boat is not sinking like some in Europe."

• Government announces further proposals to 'streamline employment law'
  
• Government publishes details of employment tribunal fees   
  
• Queen's Speech includes employment law reform  
  

Employee rights are being wound back significantly and  unless one takes the opinion that employees should not be afforded any legal protection at all from unfair dismissal, what is proposed will have a significant effect on the legal landscape. And on employees who risk being inadequately compensated when dismissed.

• At this month's Trades Union Congress in Brighton, unions voted for co-ordinated strike action and to explore the "practicalities" of a General Strike in protest at the impact of economic austerity measures on pay, pensions and jobs.
• "Employee rights are being wound back significantly" as a result of the Coalition Government's ongoing programme of employment law reform, argues City law firm Partner Michael Scutt.
  

Mrs Thatcher's policies would appear to have been very moderate compared with what will be required if the UK is to be prevented from a fate where GDP virtually stagnates and consumers expenditure per household continues to fall.

• David Cameron has said that "I don't see a time when difficult spending choices are going to go away."

• The Office for Budget Responsibility (OBR) suggests that coping with the economic impact of the UK's ageing population means that the age of austerity will need to endure until at least 2061.

So what's in store?

Here, we look ahead to some possible scenarios for the world of work and for the global economy in 2020.

The money to fund popular services will shrink by 90% as adult social care and other statutory responsibilities soak up almost all of the cash they spend, according to the financial projection by the Local Government Association (LGA). The 'conservative estimates' contained in the report show that by 2020 a £16.5bn funding shortfall will exist between the amount of money available to councils to provide services and the predicted cost of maintaining them at current levels.

When might we expect a full recovery for the UK economy?

The UK economy is currently mired in double-dip recession. The London 2012 Olympics are expected to lift the economy back into positive territory when the Office for National Statistics publishes figures for growth in gross domestic product (GDP) for the third quarter of 2012 next month (on Thursday 25 October 2012). A Reuters poll of 60 economists suggests that GDP growth could rebound to 0.7% in Q3 2012.

However, as our latest monthly round-up of GDP forecasts from economic commentators and professional bodies shows, considerable uncertainty surrounds prospects for economic growth in the third quarter of 2012 and further over the horizon:

• Economist David Blanchflower: "[A]t best I am expecting [growth in] the third quarter to be zero. Once the temporary jobs [generated by the Olympics] cease, output will fall again, suggesting that the fourth quarter may well be negative also. I have now downgraded my forecast for 2012 from -0.5% to -1.5%."
• The British Chambers of Commerce (BCC) has revised its expectations for UK GDP growth in 2012 down from 0.1% to -0.4%. It has also reduced its 2013 forecasts from 1.9% to 1.2%. BCC Chief Economist, David Kern comments: "After reported GDP falls in recent quarters, we expect a bounce back in the third quarter of 2012. However, hopes of a strong upturn may be overstated. Anecdotal reports do not support hopes that the London Olympics provided a major boost to UK growth. We assume positive UK growth of 0.5% in Q3 2012, 0.3% in Q4 2012, and a gradual improvement during 2013 and 2014. But the UK economy will face major obstacles over the next few years."
  
• The CBI says: "Our 2012 GDP forecast for the UK has been cut to minus 0.3%, from plus 0.6% previously." It expects "an increasing sense of unease to build through the remaining months of 2012, as uncertainty around the likely evolution of events in the euro area increases." The CBI predicts that growth will resume in earnest in 2013. However, it has slashed its forecast for GDP growth in 2013 from 2.0% to 1.2%, "reflecting the elevated level of uncertainty."
• Larry Elliott notes that "for the economy to register even zero growth in 2012 as a whole output needs to rise 1% [in the third] quarter and remain at that level in the final quarter."
• KPMG Chief Economist Andrew Smith is concerned that the Bank of England's gloomy predictions for flat GDP growth in 2012 (as set out in its latest quarterly Inflation Report) "could prove optimistic: output will have to pick up sharply from now on if 2012 is not to be another recession year. Economic data will have been distorted by the Jubilee holiday and the Olympics, but there seems little on the horizon to lift the economy. Austerity measures have a long way to go at home and Europe, our main export market, is stagnating at best."
• NIESR predicts that "the economy will contract by 0.5% this year, but grow by 1.3% in 2013," but cautions that "there are downside risks from the Euro area." NIESR also notes that "focusing on a 'double dip' distracts from the more important trend; the level of output has effectively been flat over the past two years. This is largely due to domestic economic factors; private sector adjustment has been exacerbated by fiscal consolidation and a dysfunctional financial system."
  

[T]he precarious nature of the current market is highlighted by the finding that almost a third (31%) of private sector firms have maintained staff levels higher than is required by their current level of output during the past year. The main reason for holding on to labour is to maintain the skills base within the organisation (as reported by 62% of these employers).

• XpertHR economic commentary September 2012: Triple-dip recession in prospect? XpertHR's economic commentary for September 2012 assesses prospects for growth and the possibility of a "triple-dip recession." We also look at the likely resurgence in trade union activity in autumn 2012, and report on latest readings on key economic indicators, including inflation, pay awards and unemployment. 

• XpertHR economic commentary September 2012: Triple-dip recession in prospect?
  XpertHR's economic commentary for September 2012 assesses prospects for growth and the possibility of a "triple-dip recession." We also look at the likely resurgence in trade union activity in autumn 2012, and report on latest readings on key economic indicators, including inflation, pay awards and unemployment.

• XpertHR economic commentary September 2012: Triple-dip recession in prospect?
  

Another quarter point [cut] on bank rate is not going to be the difference between having a recovery and not having a recovery.

Overall, the Committee judged that, at the present time, a further reduction in Bank Rate would not have any advantages over an expansion of the asset purchase programme, though it would keep the position under review.

Money markets today (10 August) implied rates would be cut from 0.50% to 0.25% in March 2013 and then rise back to 0.50% in August  2015. This is a shift from the forecast of the past two weeks when the market's been calling a rate cut by the end of the year. A rise to 0.75% is not forecast until August 2017 with an increase to 1% in October 2018. That's the most dovish forecast made so far in the financial crisis, and it's a significant shift from the spring when the market prediction for a rise to 0.75% was 'mid-2014' .

• XpertHR economic commentary August 2012: Going nowhere XpertHR's economic commentary for August 2012 looks at whether the Olympics might boost growth and at prospects for long-haul austerity.

I don't think we're yet half way through this. [...] My estimate of how long it will take to recover is expanding all the time. We have to regard this as a long-term project to get back to where we were, but we're nowhere near starting that yet. We're in a deep crisis with enormous challenges.

• XpertHR's August 2012 economic commentary article looks in detail at the possibility that we could be facing a long-haul period of economic austerity measures - which could consequently bear down on economic growth for a protracted period - and weighs up whether the economy can hope to "get back to where we were."

• David Cameron has stated that ongoing turmoil in the global economy and in the eurozone means that "I don't see a time when difficult spending choices are going to go away."
• Cameron's comments came in the wake of Cabinet Secretary Sir Jeremy Heywood's statement that "we are 25% through fiscal adjustment. Spending cuts could last seven, eight, 10 years." The Telegraph says this means that we "could see public spending squeezed until 2020."
• Some 90% of the spending cuts announced by the Coalition Government have yet to take effect, according to the IPPR.
• "Population ageing will put upward pressure on public spending," resulting in the need for further swingeing cuts to public spending. This is according to the Office for Budget Responsibility's (OBR) latest Fiscal Sustainability Report. The BBC reports that "the OBR says in 2017-18 public spending needs to be cut by another £17bn or the same amount raised in taxes to stop debt ballooning. The OBR says this change would bring total debt back to 40% of GDP by 2061. Without the move it says debt would reach 89% of annual income by 2061."

For further analysis, see: XpertHR economic commentary August 2012: Going nowhere.

(It is) entirely possible that there will be a temporary boost due to Olympics, possible that there will be more to come, but if this is Olympic related temporary hiring, it is likely to be unwound again later in the year. [...] Olympics is distorting data to an extent and adding volatility. I think the underlying data is still fairly weak.

• British Chambers of Commerce (BCC) Director General John Longworth has attacked the Coalition Government's failure to deliver effective policies to restore growth, describing their approach as "bad government, not good politics." In its latest Quarterly Economic Survey, the BCC says that "the real challenges still facing our economy are vast. Businesses must plan for relatively low growth in the next few years, as fiscal austerity restores stability to our public finances and the eurozone's problems create a challenging environment for our exports."
  
• The Ernst & Young ITEM Club offers perhaps the most optimistic assessment. It forecasts an "Indian Summer" for the UK economy, with recovery beginning in the second half of 2012. Overall, it expects GDP growth to flatline at nil in 2012, before rising to 1.6% in 2013 and 2.6% in 2014. However, it cautions that any more sustained recovery is contingent on "an improvement in the UK's export performance and investment."
  
• The IMF has slashed its forecast for UK GDP growth in 2012 from 0.7% to 0.2%. It has also cut its forecasts for growth in 2013, from 2.0% to 1.4%.
• NIESR: "[T]he UK economy remains broadly flat; a trend that has persisted for around 24 months."
• OECD economist Christophe Andre says that "the euro zone crisis is going to weigh on the UK in the coming months," which is likely to result in the UK economy shrinking over the course of 2012 as a whole. In Andre's view: "Under these circumstances you cannot expect much more than very slow growth. GDP will probably fall in 2012."
  
• PwC Economic Outlook (sign-in required): "In our main scenario we project GDP growth of around zero in 2012 as a whole, but picking up later in the year and rising to 1.7% in 2013. This 'cloudy but improving' outlook is mirrored in many UK regions, though the sunshine may come through a bit sooner in London and the South East than in some other parts of the country."
• S&P has reaffirmed the UK's AAA credit rating. S&P says: "We currently expect real GDP growth to begin to recover in the second half of 2012 and to strengthen steadily thereafter."

• XpertHR economic commentary August 2012: Going nowhere Read the full article, over on XpertHR's Pay Intelligence blog.
  

• The combined value of ticket sales for the London 2012 Olympics (which The Economist estimates are "worth around 0.1% of GDP") will be included in the GDP figure for the third quarter of 2012.
• The Olympics are also expected to attract extensive additional business to the UK during their duration.
  

[O]ur recovery - already facing powerful headwinds from high oil prices and the debt burden left behind by the boom years - is being killed off by the crisis on our doorstep. [... A] resolution of the eurozone crisis would do more than anything else to give our economy a boost.

High inflation has been the silent killer of growth for the past 18 months. While all the attention has been on the government's austerity measures, it has been the less obvious, but still very real, squeeze on consumer incomes caused by rising prices that has put the brakes on the economy.

• The CIPD says: "We do not believe that a 'deregulation drive' will lead to employers creating more jobs, thus stimulating economic growth." (For further detail of the context of these remarks, see Update 17 here)
• The ILO argues that the austerity measures and tough labour market reforms that many countries (including the UK) have launched in response to the crisis are making things worse, not better.
  
• The Coalition Government's argument that making it easier for firms to hire and fire workers will aid recovery is not backed up by historical evidence, according to University of Cambridge Reader in the Political Economy of Development Ha-Joon Chang.
• Employment law considerations are not putting employers off hiring, argues Heather Stewart in the Guardian: "Firms are not hiring for two interlinked reasons: the crippling uncertainty of the eurozone crisis; and a severe lack of demand. Why hire staff if you've got no customers to sell to?"
  

• XpertHR economic commentary July 2012: Black clouds Head over to XpertHR's Pay Intelligence blog to read the July economic commentary article in full.
  

• The BCC predicts  "that UK unemployment will increase from 2.625 million (8.2% of the workforce) in Q1 2012, to 2.9 million (9% of the workforce) in Q3 2013."
  
• The CBI expects unemployment to peak at 8.9% in Q1 2013. Unemployment will average 8.6% in 2012 and 8.8% in 2013.

• The European Commission says "the [UK] unemployment rate is [...] likely to increase slightly in 2012, to peak at 8.5% before edging back to 8.4% in 2013."
• Evenbase paints a bleak picture of prospects for the UK labour market in 2012: "People remain gloomy about their current job situations, especially those in older demographics; the number of vacancies is dropping; and most of the positive recruitment trends that we traditionally see in January and February have proved hard to find."
• Lloyds expects "unemployment to peak at close to 9% by early next year."
  
• NIESR: "The unemployment rate will rise to about 9% this year and remain high throughout the forecast period. Elevated unemployment for such a long period is likely to do permanent damage to the supply side of the economy, with large long-run economic costs."

Unemployment crisis across Europe...
Unemployment remains uncomfortably high across Europe, with the Eurozone jobless rate holding steady at 11% in April 2012, according to latest data from eurostat.

These steps are being taken in the hope that financial markets will react positively, thereby boosting confidence, growth and job creation. However, these expectations have not been met.

The fundamental reason for these failures is that these policies [...] are unable to stimulate private investment. The austerity trap has sprung. Austerity has, in fact, resulted in weaker economic growth, increased volatility and a worsening of banks' balance sheets leading to a further contraction of credit, lower investment and, consequently, more job losses. Ironically, this has adversely affected government budgets, thus increasing the demands for further austerity.

• Growth in the third quarter of 2012 is likely to be boosted by the Olympics. The combined value of ticket sales for the London 2012 Olympics (which The Economist estimates are "worth around 0.1% of GDP") will be included in the GDP figure for the third quarter of 2012. The Olympics are also expected to attract extensive additional business to the UK during their duration. ONS publishes its preliminary estimate of Q3 2012 GDP growth on Thursday 25 October 2012.
   The Bank of England estimates that the London 2012 Olympics will cause "output to be around 0.2% higher in the third quarter than it otherwise would have been," the Guardian reports. It says that this could "spare the UK a fourth successive quarter of negative growth and bring the double-dip recession to an end." However, other economic commentators are not getting their hopes up. Howard Archer of IHS Global Insight believes that we are unlikely to see "being anything more than a blip" in growth resulting from the 2012 Olympics. Moody's expects that "the Games glow will wear off quickly." ONS publishes its preliminary estimate for Q3 2012 GDP growth on Thursday 25 October 2012.

XpertHR resources for employers preparing for the 2012 Olympics

XpertHR provides a wide range of resources to help employers preparing for the 2012 Olympics. These include the following:

• Sporting Events: An Employer's Guide Complete the form to download a special XpertHR Professional model policy to deal with sporting or other special events (such as the World Cup football tournament or the Olympics). Also includes an overview of law relating to the policy and links to further relevant resources from XpertHR Professional.
  
• 2012 Olympics The XpertHR Benchmarking survey on employers' arrangements for the 2012 Olympics and Paralympics, based on responses from 185 organisations with a combined workforce of 495,000 employees (XpertHR Benchmarking subscription required).
• Olympics: Employer guidance To help employers deal with any issues that may arise, we have gathered together information from XpertHR on the subject, along with links to external resources for employers.
• XpertHR economic commentary June 2012: The austerity trap This article places the above analysis of the potential economic impact of the 2012 Olympics in a broader economic context, including analysis of concerns that austerity measures could be hampering prospects for economic recovery.
  

• XpertHR economic commentary June 2012: The austerity trap

Close to five years after the global financial and economic meltdown, our analysis shows that there is a majority of countries where the risk of social unrest has increased. This is not surprising given that good jobs remain scarce and income inequality is rising. There is a growing sense that those most affected by the crisis are not receiving adequate policy attention.

• A sobering warning that social unrest could follow particularly stringent austerity measures was issued by former Greek minister Michalis Chrysohoidis last week: "If Greece cannot meet its obligations and serve its debt the pain will be great. What will prevail are armed gangs with Kalashnikovs and which one has the greatest number of Kalashnikovs will count. We will end up in civil war."
• Leading UK HR blogger Kate Griffiths-Lambeth meanwhile weighs in with the observation that latest OECD data show that "the countries [in Europe] with the highest [youth] unemployment figures [...] have all suffered civil wars within living memory." Greece registered the highest youth unemployment rate.
  
• Deputy Prime Minister Nick Clegg warns that a eurozone collapse could create the "ideal recipe for an increase in extremism and xenophobia."

Reconsidering austerity?

There are signs that European governments could now be reconsidering their approach to austerity measures. The May 2012 Eurogroup Working Group (EWG) meeting of EU leaders "marked a shift from collective austerity to pro-growth measures following the election of the Socialist François Hollande as French President," the Independent reports.

But such a modified approach to austerity is akin to a form of cognitive dissonance, argues Warwick University Professor of Political Economy Robert Skidelsky, writing in the Guaridian. Skidelsky says:

In Britain and Europe, policymakers are moving from a state of denying that their policies are wrong to one of cognitive dissonance - holding two contradictory theories simultaneously. The two theories are austerity and prosperity. This is a welcome sign of progress. Above it towers the peak of coherence. Drop austerity, go for growth and the debt will start to come down.

• Will tough economic times lead to further social unrest in 2012? An earlier post on this topic, from January 2012.
• XpertHR's June 2012 economic commentary, which will be published to our Pay Intelligence blog this Friday (1 June 2012), looks in greater detail at the economic situation in the UK and Europe, with a focus on its implications for HR.

• The Bank of England has slashed its central projection for UK GDP growth in 2012 from 1.2% to 0.8%.
• The CBI expects the extra June Bank holiday (on Tuesday 5 June 2012) to drag on growth in second quarter. But it says that "looking ahead, it does not appear that a persistent downturn is in prospect. Indeed, the outlook appears to have brightened somewhat." The CBI sees a gradual "improvement in momentum" later in 2012. If risks from high oil prices and euro crisis do not materialise, then "growth rates should be somewhat stronger in the second half of the year, partly due to some boost from activity displaced as a result of the extra bank holiday, and also from the Olympics." Nonetheless, the CBI has downgraded its 2012 GDP forecast from 0.9% to 0.6%. However, its GDP projection for 2013 is unchanged at 2%.
  
• The European Commission says: "The overall outlook for 2012 remains uncertain but, with an anticipation of stronger real wages improving household consumption growth towards the end of the year and more stability in the UK's export markets, GDP growth is expected to remain positive at 0.5% in 2012 with a further improvement in 2013 to 1.7% as investment rises." 
• The BBC reports that the IMF has cut its UK GDP growth forecast for 2012 to a level that is in line with latest projections from the UK's Office for Budget Responsibility (OBR). The OBR expects the UK economy to grow by 0.8% in 2012. The IMF recommends that the UK considers further cuts to interest rates or extending its programme of quantitative easing to boost growth.
• NIESR says: "Growth this year will be close to zero, but about 2% in 2013. This is essentially unchanged from our January forecast."
• The OECD forecasts UK GDP growth of 0.5% in 2012, rising to 1.9% in 2013. It says: "Growth will remain weak in the first half of 2012, but should gain momentum thereafter, with private consumption supported by higher real incomes, as inflation slows, and exports and business investment revive with stronger external demand. Unemployment will continue to rise over the projection period, due to job cuts in public administration and weak output growth."

See also:

• XpertHR's biannual analysis of the UK economic outlook is published to XpertHR's Pay and Benefits zone tomorrow (Friday 25 May 2012.
  
• XpertHR economic commentary May 2012: On the critical list With the UK economy back in recession, XpertHR's May 2012 economic commentary looks at prospects for recovery and how long the age of austerity might last.
  

• XpertHR economic commentary May 2012: On the critical list

If we are to counteract the costs of ageing, older people will have to work for longer.

• Rising longevity means that "around one-third of babies born in 2012 in the United Kingdom are expected to survive to celebrate their 100th birthday," according to latest ONS estimates.
  
• However, the IMF argues that such forecasts "have consistently underestimated lifespans." This gives rise to "longevity risk" ("the risk that actual lifespans of individuals or of whole populations will exceed estimates"). This in turn means that Governments risk having underestimated the future costs associated with ageing populations. The IMF believes that "longevity shocks" are likely as the true costs associated with increased longevity become clear.
• The OECD finds that "most countries will need a sustained period of fiscal tightening, acting on both the revenue and spending side [...] in order to bring their debt back to 50% of GDP by around mid-century." But this need for "sustained" cuts could be exacerbated significantly by mounting "spending pressures, principally from health and long-term care," arising from ageing populations.
  

• XpertHR economic commentary May 2012: On the critical list XpertHR's latest economic commentary article puts the latest inflation data in context.

• The youth unemployment rate was 22.2% on the ILO measure over the three months to February 2012, down 0.1 percentage points on the previous quarter.
• The youth unemployment level was 1.03 million over the three months to February 2012, down 9,000.
  

The number of people in employment aged 16 and over increased by 53,000 on the quarter but fell by 57,000 on the year to reach 29.17 million. The number of part-time workers increased by 80,000 on the quarter to reach 7.94 million but the number of full-time workers fell by 27,000 to reach 21.23 million. The number of employees and self-employed people who were working part-time because they could not find a full-time job increased by 89,000 on the quarter to reach 1.40 million, the highest figure since comparable records began in 1992.

[The latest figures] were better than expected, with employment up, unemployment - including youth unemployment - down and a recovery in hours worked, suggesting some workers were busier and their jobs more secure. Against that, the growth in jobs was driven entirely by part-time work, suggesting employers are still too nervous to create full-time vacancies.

Most people working part-time are doing so out of choice. For those seeking full-time work the alternative to taking a part-time role is to be unemployed and on benefits, not contributing to the economy and not keeping their skills fresh. Taking on a part-time job can be a stepping stone to landing the full-time position they want.

The total number of unemployed people fell by 35,000 over the quarter to reach 2.65 million. These are the first quarterly falls in the unemployment level and rate since March-May 2011. The number of unemployed men fell by 43,000 to reach 1.51 million but the number of unemployed women increased by 8,000 to reach 1.14 million, the highest figure since the three months to November 1987.

• The image used on this page was sourced from Wikimedia Commons.
• XpertHR economic commentary April 2012: Not out of the woods yet
  

It's a very tough economic situation. It's taking longer than anyone hoped to recover from the biggest debt crisis of our lifetime. The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.

• Economist Chris Dillow has tweeted his initial reaction to the news that the economy is back in recession. Dillow says: "Obsession with small drop in GDP is statistical fetishism. Even if GDP had grown 0.2% in Q1, it would still have been a poor performance."
• @MarkitEconomics draws interesting parallels with earlier GDP data releases: "As @WilliamsonChris points out...deju vu today. Cast mind back to Q3 09. First est was -0.4%. Latest 0.2%. http://tinyurl.com/7hhhlsf"
  

"There has been no growth in the economy since September 2010, with three quarters of falling output punctuated by two quarters of expansion. To all intents and purposes Britain has had a double dip recession, even though the technical definition of two successive quarters of negative growth has not been met. [...] the real drag on the economy has been household consumption, by far the biggest element of gross domestic product."

• The British Chambers of Commerce (BCC) warns that the outlook for GDP growth past Q1 2012 is uncertain: "[G]rowth is likely to weaken in Q2 due to the additional Bank Holiday for the Queen's Diamond Jubilee. The London Olympics in Q3 may also distort the growth figures." It has revised its 2012 GDP forecast down from 0.8% to 0.6%. 2013 unchanged at 1.8%.
• The Ernst & Young ITEM Club predicts UK GDP growth of 0.4% in 2012.
• The IMF expects the UK economy to grow by 0.8% in 2012.
  
• NIESR says it expects the UK's current "economic weakness to be temporary, with the recovery taking hold in 2013. [...] We do not expect output to pass its peak in early 2008 until 2014."
  
• The OBR recently raised its estimates for UK GDP growth in 2012. It expects the UK economy to grow by 0.8% in 2012, having previously predicted 0.7% growth.
• Standard & Poor's (S&P) has reaffirmed the UK's AAA credit rating as "stable".

• XpertHR economic commentary April 2012: Not out of the woods yet

• The British Chambers of Commerce (BCC) expects the unemployment level to hit 2.9 million (equivalent to 9% of the workforce) in Q1 2013. The BCC believes young workers will be hardest hit. It expects to see a 41% jobless rate for 16 and 17 year olds by Q1 2013, while the 23% of 18 to 24 year olds will be out of work by Q4 2012.
• The Institute for Public Policy Research (IPPR) predicts that unemployment will not peak until September 2012 at the earliest, with a further 100,000 people becoming unemployed over the remainder of the year, primarily as a result of job cuts in the public sector. An IPPR spokesperson comments: "This has been the longest recession and the slowest recovery that Britain has ever experienced. The risk is that high unemployment becomes a permanent feature of the UK economy, as it did in the 1980s."
• The Office for Budget Responsibility (OBR) expects unemployment to peak this year. XpertHR summarises its latest unemployment forecasts: "Unemployment will peak in 2012 - both on the ILO measure (8.7% unemployment in 2012) and the claimant count (1.67 million unemployed). The OBR says that one million more jobs will be created over the next five years. Consumer prices index inflation is forecast to average 2.8% in 2012 but to fall to 1.9% in 2013."

• XpertHR economic commentary April 2012: Not out of the woods yet XpertHR's April 2012 economic commentary looks at the risk of double-dip recession, trends in unemployment, and predictions for private sector pay awards.

• The OECD estimates that the UK economy contracted by 0.4% in the first quarter of 2012. However, it expects UK GDP growth to return to positive territory quickly, to run at 0.5% in the second quarter.
• The past 15 months have seen UK economy undergo "the Osborne collapse,  according to economist David Blanchflower: "It appears austerity has failed in the UK lab experiment." Blanchflower also notes that a lapse back into recession "could result in one or more of the credit rating agencies removing Britain's cherished AAA status. Osborne has claimed that maintaining this rating is an important goal of his strategy, so losing it would be a great blow."
  

• The UK economy is likely to have enjoyed positive growth in the first quarter of 2012, according to the British Chambers of Commerce (BCC). It says that "the UK economy has returned to positive growth in Q1 2012, but [there are] huge challenges still facing our economy in the years ahead." Indeed, the BCC warns that the outlook past Q1 2012 is uncertain: "After a rebound in Q1, growth is likely to weaken in Q2 due to the additional Bank Holiday for the Queen's Diamond Jubilee. The London Olympics in Q3 may also distort the growth figures." It has revised its 2012 GDP forecast down from 0.8% to 0.6%. 2013 unchanged at 1.8%.
• The Ernst & Young ITEM Club predicts UK GDP growth of 0.4% in 2012.
• The IMF expects the UK economy to grow by 0.8% in 2012.
  
• NIESR's latest monthly GDP estimates suggest that the UK economy recorded very weak growth of 0.1% in Q1 2012 - just enough to avoid a double-dip recession. NIESR says: "Our monthly estimates of GDP suggest that output grew by 0.1% in the three months ending in March after no growth in the three months ending in February 2012. These data suggest the UK economy has avoided a 'technical' recession (two consecutive quarters of decline). With such weak rates of growth the UK's negative output gap is likely to widen. But we do expect this economic weakness to be temporary, with the recovery taking hold in 2013. [...] We do not expect output to pass its peak in early 2008 until 2014."
  
• The OBR recently raised its estimates for UK GDP growth in 2012. It says: "We still expect the economy to avoid a technical recession with positive growth in the first quarter of 2012, although another fall cannot be ruled out given the volatility of quarterly output estimates." The OBR expects the UK economy to grow by 0.8% in 2012, having previously predicted 0.7% growth.
• Standard & Poor's (S&P) has reaffirmed the UK's AAA credit rating as "stable".
  

• IHS Global Insight economist Howard Archer warns of the dangers that "sticky" inflation could pose to recovery: "Sticky inflation would maintain the squeeze on consumers' purchasing power and make it harder for the Bank of England to do more quantitative easing should the economy continue to struggle."

• The OBR's central forecast is for "inflation to continue falling as the upward pressures from energy and commodity prices fade and spare capacity weighs on prices." It predicts that CPI will average 2.8% in 2012, falling to 1.9% in 2013. However, the OBR is also mindful of the risks to inflation posed by volatile oil prices. Its report additionally includes projections for a possible "'temporary oil price spike scenario,' in which a temporary shock to oil prices leads to prolonged cyclical weakness in the economy."

• XpertHR economic commentary April 2012: Not out of the woods yet XpertHR's April 2012 economic commentary looks at the risk of double-dip recession, trends in unemployment, and predictions for private sector pay awards.
• Subdued pay rise of 2% expected in the year ahead  
  
• Private sector pay forecasts 2012: How does your organisation compare? 
  

• "A new recession is inevitable" for the US economy, argues Lakshman Achuthan of the Economic Cycle Research Institute (ECRI), which has a strong record of predicting recessions. CNN says: "Achuthan predicts the recession will happen even without a new shock to the economy, such as a spike in oil and gas prices or a Greek sovereign debt default sparking a financial meltdown. If those things occur, he says they will simply make an inevitable recession more painful." This "would be a new recession, not a double-dip."
• Rising oil prices and weak global growth represent potential "headwinds" for the US recovery, says New York Federal Reserve head William Dudley.
  
• A weak property market means that the US recovery could stall in the coming months, according to Robert Reich, writing in the Guardian. Reich identifies this as "the central paradox at the heart of the American economy today."
• It is unlikely that recent falls in the US unemployment rate can be sustained without a recovery in demand, according to the Federal Reserve Chairman Ben Bernanke. He says: "What we may be seeing now is the flip-side of the fear-driven layoffs that occurred during the worst part of the recession, as firms become sufficiently confident to move their workforces into closer alignment with expected demand for their products."

See also

• XpertHR economic commentary April 2012: Not out of the woods yet XpertHR's April 2012 economic commentary looks at the risk of double-dip recession, trends in unemployment, and predictions for private sector pay awards.
  

"The number of people employed in the public sector fell by 37,000 between September and December 2011 to reach 5.94 million, the lowest figure since June 2003. The number of people employed in the private sector increased by 45,000 on the quarter to reach 23.17 million."

• ONS does not appear to report whether these new jobs in the private sector are full-time or part-time. Overall, numbers of part-time workers are on the rise. There were 7.88 million people in part-time employment over the three months to January 2012, a rise of 59,000.
• Economist David Blanchflower argues that a closer analysis of the data (from the time when the Coalition Government's policies began to take hold) suggests that "the private sector is not generating the jobs to offset cuts in the public sector." Blanchflower says: "The public sector job cull meant that net job creation was negative, of the order of -44,000. I have no idea how anyone in their right minds could interpret this as good news."

• XpertHR economic commentary April 2012: Not out of the woods yet XpertHR's April 2012 economic commentary looks at the risk of double-dip recession, trends in unemployment, and predictions for private sector pay awards.

• XpertHR economic commentary April 2012: Not out of the woods yet
  

Mr Osborne said the OBR expects the UK to avoid a technical recession - defined as two consecutive quarters of contraction - and forecasts positive growth in the first quarter of this year. [...] Mr Osborne said that the crisis in the eurozone remained a major risk to the OBR's forecast, while another risk came from a "further spike in oil prices."

For the year 2011, GDP in volume terms increased by 0.7%.

• XpertHR economic commentary March 2012: Zigzag recovery or double-dip recession?
• XpertHR's economic commentary for April 2012 will be published this Sunday (1 April 2012).
• The image used on this page was sourced from Wikimedia Commons.

[Unemployment] measures are the most worrying of all. Growth will reset the economic clock, providing new jobs and the resources to pay down debts. The IMF predicts that in three years Italy will be the only G7 country with real GDP lower than in 2007. Within this group, America, which is already growing again, is in a better position than Britain, which is not. But periods of unemployment scar workers even after economies have crawled back to health. For some, the time lost to the crisis will never be recovered.

• XpertHR Economic Commentary April 2012: Not out of the woods yet
  

Unemployment rate stands at highest level since 1995...
Key readings from today's official unemployment data release include the following:

• The headline unemployment rate (on the ILO definition) rose to 8.4% of the economically active population between November 2011 and January 2012 (up from 8.3%). ONS says: "The unemployment rate was last higher in the three months
  to November 1995."
• The number of unemployed people rose by 28,000 to stand at 2.67 million.
• The number of unemployed 16 to 24 year olds in the UK rose by 16,000 to 1.04 million over the three months to January 2012.
• The youth unemployment rate hit 22.5% over the three months to January 2012 (an increase of 0.4 percentage points from the previous rate of 22.1%). Reuters reports that "the [youth unemployment] figures will increase the pressure on Chancellor George Osborne to take measures to boost growth and jobs when he presents his 2012/13 budget next week, at a time when the economy is struggling to show sustainable recovery."
  
• ONS also reports an alternative measure of youth unemployment, which does not conform to the rules of the internationally-recognised ILO measure of youth unemployment: "Excluding people in full-time education, there were 731,000 unemployed 16 to 24 year olds in the three months to January 2012, up 1,000 from the three months to October 2011. The corresponding unemployment rate was 20.8 per cent of the economically active population for 16 to 24 year olds not in full-time education, up 0.2 percentage points from the three months to October 2011."
  
• ONS also notes that "[t]he number of employees and self-employed people who were working part-time because they could not find a full-time job increased by 110,000 on the quarter to reach 1.38 million, the highest figure since comparable records began in 1992."
  

• "The inactivity rate for those aged from 16 to 64 was 23.1 per cent, down 0.1 on the quarter. There were 9.30 million economically inactive people aged from 16 to 64, down 27,000 on the quarter."

There was also some suggestion that private sector job creation could finally be starting to overtake the rate of public sector job losses. ONS says:

The number of people employed in the public sector fell by 37,000 between September and December 2011 to reach 5.94 million, the lowest figure since June 2003. The number of people employed in the private sector increased by 45,000 on the quarter to reach 23.17 million.

However, it is worth noting that ONS does not appear to report whether these new jobs in the private sector are full-time or part-time. (Thanks to @mervyndinnen for bringing this aspect of the data to my attention, via Twitter).

Overall, numbers of part-time workers are on the rise. ONS says: "The number of people in part-time employment was 7.88 million in the three months to January 2012, up 59,000 from the three months to October 2011. Of this total, 2.02 million were men and 5.87 million were women."

• The headline unemployment rate will average 8.9% in 2012, rising to 9.0% in 2013, says the CBI.
• The British Chambers of Commerce (BCC) expects the UK unemployment level to hit 2.9 million (equivalent to 9% of the workforce) in Q1 2013.
  
• The headline unemployment rate will rise to "about 9%" in 2012, according to latest projections from NIESR. It says: "Unemployment at this elevated level for such a long period is likely to do permanent damage to the supply side of the economy, with large long-run economic costs."

Olympics to the rescue?
In contrast, Manpower argued yesterday that its latest Employment Outlook report suggests that the UK labour market "appears to be turning a corner" - but it also cautions that "it's too early to say that a full-blown recovery is upon us."

Manpower's optimistic view is based on the smallest of 'green shoots'. The key reasons to be optimistic about the UK jobs market highlighted by Manpower are that a minority of employers are considering ending recruitment freezes, and that many employers in London are planning to create temporary jobs this summer, to coincide with the 2012 Olympics.

Manpower UK MD Mark Cahill says: "This Olympic effect could well help drag us out of recession and into recovery."

• Consumer prices index (CPI) inflation stood at 3.6% in January 2012, down from 4.2% in December 2011. CPI has now come in above the upper end of the Government's symmetrical target of one percentage point either side of 2% (i.e. within the range of 1% to 3%) for two full years. In other words, CPI has been at or above 3% for each month since January 2010.
• Retail prices index (RPI) inflation stood at 3.9% in January 2012, a fall of 0.9 percentage points from 4.8% in December.
  

• A spike in gas prices caused by recent cold weather.
• "Disruptions to the supply of oil, for example from Iran or Nigeria, could pose an upside risk to the inflation outlook," says Mervyn King. Indeed, the Evening Standard reports that - in its words - "sabre-rattling by Iran" is already pushing oil prices upwards. Petrol prices hit a record high of 137.44p at the weekend, the BBC reports.
  

[T]he path of recovery is likely to be slow and uncertain. For much of this year, there is likely to be a zigzag pattern of alternating positive and negative quarterly growth rates.

Political objections must be overridden. It is too difficult to hire and fire, and too expensive to take on new employees. It is intellectually unsustainable to believe that workplace rights should remain untouchable while output and employment are clearly cyclical.

Although the coalition agreement may require the chancellor to raise personal tax allowances, he should use the proceeds of spending reductions to cut employers' national insurance contributions across the board. If that is deemed impossible, he should consider targeting such tax cuts on the employment of 16 to 24-year-olds, making them more attractive to employers.

The Chancellor is under pressure from Conservative MPs to relax employment protection laws as part of a "go for growth" package to be included in his Budget on 21 March.

David Cameron is sympathetic to the backbench demands but they are being strongly opposed by Nick Clegg and Vince Cable, the Liberal Democrat Business Secretary. [...] Mr Cable and Norman Lamb, the new Business Minister, will shortly issue a "call for evidence" on a watered down version of the Beecroft report. This would limit the "fire at will" proposal to the three million people employed by firms with fewer than 10 workers. But the two Lib Dem ministers will make clear they have no intention of turning the proposal into law by stopping short of a full-scale consultation exercise. Instead, they favour an informal, conciliatory approach to resolving disputes between employers and staff accused of poor performance.

It is no accident of geography that the US economy is now making real inroads into unemployment, which in Britain is still rising. In America it is virtually as easy to fire as it is to hire, significantly reducing the risks of job creation.

The reluctance of industry leaders to stick their heads above the parapet in part reflects the continued power of 'big' business, which has tolerated oppressive levels of labour protection because it has the management systems and market clout to absorb the costs, and also because these protections are a highly effective barrier to entry.

• "The Chancellor faces his third budget with the economy and public finances in considerably weaker shape than he had hoped a year ago," says IFS Director Paul Johnson.
  
• "The Budget cupboard is bare," says the Telegraph. Elsewhere, the Telegraph notes that Osborne "will not be afforded the luxury of wowing with eye-catching giveaways, instead he may have to settle for what many in the world of business believe will be a "fiddling around the edges" affair."

However, the Guardian's Larry Elliott argues that last week's news of a stronger-than-expected public finance surplus for January 2012 means that "some modest budget sweeteners are in the offing."

• Acceleration of employment law reform. In November 2011, the Coalition Government published its published its response to the consultation on resolving workplace disputes, setting out proposals which it described as "the most radical reform to the employment law system for decades." The Telegraph reports that a number of business bodies want to see Osborne announce measures to speed up this process of employment law reform in the Budget 2012. For example: British Chambers of Commerce Director General John Longworth says "reforms to employment law [...] must be significantly speeded up;" and IOD chief economist Graeme Leach wants to see "deep reduction of burdens on business." Former Defence Secretary Liam Fox recently joined these voices, arguing that "To restore competitiveness we must begin by deregulating the labour market." Fox says: "Political objections must be overridden. It is too difficult to hire and fire, and too expensive to take on new employees. It is intellectually unsustainable to believe that workplace rights should remain untouchable while output and employment are clearly cyclical."
• National minimum wage rates for 2012/2013 announcement. It is possible that Osborne will announce the national minimum wage rates for 2012/2013 (which will come into effect from Monday 1 October 2012) in the Budget 2012. The Low Pay Commission (LPC) delivered its 2012 report - which sets out its recommendations for the 2012/2013 national minimum wage rates - to the Government last month. Given the current backdrop of ongoing economic uncertainty, rising unemployment and falling inflation, news of the national minimum wage rates for 2012/2013 will be particularly closely watched. Press reports suggest that the national minimum wage adult rate could be increased for 2012/2013, but that the rates paid to younger workers are "most likely to be frozen." See National minimum wage 2012/2013: What can we expect from the October 2012 national minimum wage increase? for further analysis of what might be in prospect for the national minimum wage in 2012/2013 and beyond.

• XpertHR economic commentary March 2012: Zigzag recovery or double-dip recession?
  

The low level of mortgage rates (and so income gearing) may have helped to contain distress. New evidence suggests that forbearance by lenders may also have been important.

• Last week, Bank of England Governor Mervyn King cast doubts on the possibility of an interest rate rise this year or next. King told the Treasury Select Committee: "The yield curve suggests that an increase in bank rate is not fully priced in until mid-2014. But, obviously, if the very real risks I see about inflation do materialise, then it is perfectly possible that the first rise will come earlier than that." 
• British Chambers of Commerce (BCC) Chief Economist David Kern says: "We expect official interest rates to remain at 0.5% until the final months of 2013, and then rise modestly to 1.00% in Q2 2014."
• "We expect the Bank of England's interest rates to remain on hold, at 0.5%, until the end of 2013, with only gradual increases thereafter." This is according to the IFS.
  

• Consumer prices index (CPI) inflation fell back to 4.2% in December 2011 (down 0.6 percentage points from 4.8% in November).
• Retail prices index (RPI) inflation dropped to 4.8% in December 2011, a fall of 0.4 percentage points from the previous month's figure (5.2%).
  

• The EEF expects CPI inflation to hit its 2% target rate in August 2012.
  
• The Ernst & Young ITEM Club says "falling inflation should provide a platform for a consumer recovery" in the second half of 2012. It expects CPI to average 2.3% in 2012, slowing further to 1.9% in 2013.

[I]it may be that by the end of 2012, it's deflation, not inflation we'll be worrying about - though if Iran carries out its threat to close the strait of Hormuz, and choke off oil supplies to the west, all bets are off.

• XpertHR economic commentary February 2012: Squeezed
• The image used on this page was sourced from Wikimedia Commons.
  

[The GDP figures for Q4 2011] are not entirely unexpected because of what's happening in the world and what's happening in the eurozone crisis. The truth is that dealing with those problems is made more difficult by the situation in the eurozone.

The public sector strike on 30 November is likely to have had some impact on GDP in the fourth quarter. It is not possible to measure the effect on GDP directly. Information from the ONS's Labour Disputes Inquiry, which was published as part of the Labour Market release on 18 January, suggests that nearly one million working days were lost, representing about 0.2% of the total number of working days for the public sector for the quarter.

• Bank of England Governor Mervyn King says UK GDP growth will be "flat or close to zero" over the first half of 2012.
• The CBI's "base scenario" projection is that the UK economy will rebalance itself, with GDP growth averaging 1.6% until 2015.
  
• "The annual rate of economic growth is forecast to remain below 2% until 2014," according to the CIPD.
• The EEF expects 1% GDP growth in 2012.
• The Ernst & Young ITEM Club forecasts that UK GDP will run at 0.2% in 2012.
  
• Goldman Sachs expects 0.7% GDP growth for the UK in 2012, compared with -0.8% for the eurozone.
• The IMF has slashed its forecast for UK GDP growth in 2012 from 1.6% to 0.6%.
  
• The Office for Budget Responsibility (OBR) predicts that the UK economy will grow by 0.9% over the course of 2011, with growth slowing to 0.7% in 2012. The BBC's Stephanie Flanders warns that even these predictions could prove "optimistic" if we see a recession in the eurozone.
  
• The UK economy will contract by 1.3% in 2012, says Standard Chartered.
  

• XpertHR economic commentary January 2012: Welcome to 'no-growth Britain'?
  
• Economic prospects for 2012: The HR bloggers weigh in
  

The number of people in public sector employment was 5.99 million in September 2011, down 67,000 from June 2011. The number of people in private sector employment in September 2011 was 23.12 million, up 5,000 from June 2011.

The number of employees fell by 109,000 over the quarter to reach 24.79 million. The number of self-employed people increased by 101,000 on the quarter to reach 4.12 million.

• The headline unemployment rate (on the ILO definition) climbed to 8.4% between September and November 2011. This represents a rise of 0.3 percentage points on the rate for the previous rolling quarter (8.1%). ONS comments: "The unemployment rate was last higher in the three months to November 1995."
  
• The number of unemployed people rose to 2.68 million, an increase of 118,000. ONS provides the following useful gender breakdown of unemployment levels via Twitter: "Male #unemployment 1.56m, highest since 1995. Female unemployment 1.13m, highest since 1987. Watch #ONS video"
  
• The number of  people "working part-time because they could not find a full-time job" hit 1.31 million, which ONS says is "the highest figure since comparable records began in 1992."
• Youth unemployment once again hit a record high, rising to 22.3% over the three months to November 2011. ONS says: "The number of unemployed people aged from 16 to 24 increased by 52,000 over the quarter to reach 1.04 million; this figure includes 313,000 people in full-time education who were looking for work. The unemployment level for people aged from 16 to 24 was the highest since directly comparable records began in 1992." The Guardian provides a useful interactive map of UK youth unemployment levels by region.
  
• The alternative measure of youth unemployment (which excludes people in full-time education, and is favoured by the CIPD and by Iain Duncan Smith) also rose sharply. ONS says that on this measure "there were 729,000 unemployed 16 to 24 year olds in the three months to November 2011, up 8,000 from the three months to August 2011. The corresponding unemployment rate was 20.7% of the economically active population for 16 to 24 year olds not in full-time education, up 0.5 percentage points from the three months to August 2011."
  

• The BCC predicts that unemployment will hit 8.7% in Q4 2012 (2.77 million).
• The CIPD expects unemployment to hit 2.85 million by the end of 2012, and to peak at 2.9 million in the first half of 2013.
• Retail consultants CBRE predict that a "retail recession" is about to hit UK high streets, and estimates that retailers could cut up to 40,000 jobs over the next 18 months.
• The unemployment rate for 2012 as a whole will be 8.5%, according to Goldman Sachs.
  

• XpertHR economic commentary January 2012: Welcome to 'no-growth Britain'?

The big facts are that the UK is set for a lost decade and a longer period of stringency than expected. The Government's position is that there is no alternative. That has now become a self-fulfilling prophecy.

Further severe spending cuts [...] look unavoidable unless taxes rise significantly or we get a near-miraculous growth spurt in the next five years. Whoever is in office during the next decade will have to deal with this problem eventually.

[S]upport for government increasing taxes and spending more on health, education and social benefits has halved from a peak of 63% [in 2002], to just 31% [in 2011]. It's striking that support for 'tax and spend' policies has reduced to a level last seen in 1983 in the aftermath of recession and continuing 'stagflation' in the economy.

• XpertHR economic commentary January 2012: Welcome to 'no-growth Britain'?
• Economic prospects for 2012: The HR bloggers weigh in This article includes more of Steven Toft's economic expectations for 2012, alongside those of UK HR bloggers Kevin Ball, Mervyn Dinnen and Neil Morrison.
  

• The risk of social unrest is increasing around the world, according to the ILO World of Work report 2011. The ILO warns that "the world economy is likely to create only half the jobs needed," resulting in a new and deeper jobs recession. Against this background, the ILO's new social unrest index suggests that "in over 45 of the 118 countries examined, the risk of social unrest is rising. This is especially the case in advanced economies, notably the EU, the Arab region and to a lesser extent Asia." The ILO finds that "unemployment is most strongly associated with the estimated risks of social unrest, along with disposable income."

• In a sobering blog post, Frances Coppola argues that "austerity-driven recessions" across the eurozone could result in revolution or even war. She says: "[O]nce recession takes hold in the entire eurozone, people will start to see that their lives and their futures are being sacrificed on the altar of a political dream that is rapidly becoming a nightmare - and they will take action. We are already seeing political unrest in Greece, Spain and Portugal. As recession deepens, this unrest will worsen and may be violently repressed - a fertile ground for actual revolt and even war."

• The Foreign Office warns that instability in the eurozone could cause dangerous unrest. 
• Armed Forces planners believe economic issues arising from the eurozone crisis pose a "strategic risk" to the UK. General Sir David Richards said: "I am clear that the single biggest strategic risk facing the UK today is economic rather than military. [...] The country's main effort must be the economy. No country can defend itself if bankrupt."

• XpertHR economic commentary January 2012: Welcome to 'no-growth Britain'?

• Growth in the first quarter of 2012 will be aided by the Bank of England's October 2011 extension of quantitative easing. Martin Weale estimates "that the current programme of asset purchases [will] boost growth by up to 0.5%, in line with the Bank's official calculations." ONS publishes its preliminary estimate of Q1 2012 GDP growth on Wednesday 25 April 2012.
• Growth in the second quarter of 2012 could benefit from an "Olympic bounce." UK GDP growth in the second quarter of 2012 will be boosted by deferred revenue from advance Olympic ticket sales in Q2 2011. ING estimates that Olympic ticket sales are worth £400 million in total, which could have created a 0.2% "Olympic bounce" had they been incorporated into GDP data for Q2 2011. It remains to be seen what impact this deferred revenue will have on growth in the second quarter of 2012. ONS publishes its preliminary estimate of Q2 2012 GDP growth on Wednesday 25 July 2012.
• Growth in the third quarter of 2012 is likely to be boosted by the Olympics themselves. ONS publishes its preliminary estimate of Q3 2012 GDP growth on Thursday 25 October 2012.
  

[M]uch of the benefit [of hosting the Olympics] is from jobs created through construction, which is out of the way long before the opening ceremony, while the disadvantages - including less productive working as people huddle round their TV screens, and travel disruption as hundreds of thousands of supporters flock to London - take place during the games and afterwards.

• XpertHR economic commentary January 2012: Welcome to 'no-growth Britain'?

• XpertHR economic commentary January 2012: Welcome to 'no-growth Britain'?
• Economic prospects for 2012: The HR bloggers weigh in
  

• Kevin J Ball: "For HR, I'm afraid it's more of the same for 2012."

• Mervyn Dinnen: "A post-traumatic flat-lining economy suffering regular aftershocks."

• Neil Morrison: "The story of the euro is a long way from over."

• Steven Toft: "The outlook is for an aging, low growth economy."

• Economic prospects for 2012: The HR bloggers weigh in
• XpertHR economic commentary January 2012: Welcome to 'no-growth Britain'?
  

• Osborne's Autumn Statement: A pivotal moment for 'Osbornomics'?
  
• XpertHR economic commentary December 2011: In the bleak midwinter
  

By 2015 and 2016 growth is expected to be at 3%. Key reasons for the reduction in the OBR's forecasts include the effects of unexpected external inflation shocks - energy price and commodity price rises - which 'explains the slowdown in growth in Britain in the past 18 months.' In addition, the pre-recession 'unsustainable boom' was bigger than previously thought and the bust was consequently bigger too.

• XpertHR economic commentary December 2011: In the bleak midwinter

• There are now 1.02 million unemployed 16 to 24 year olds in the UK.
• The youth unemployment rate meanwhile rose to 21.9%.
  

• There were 730,000 unemployed 16 to 24 year olds (on the alternative measure) between August and October 2011, up 58,000 on the quarter.
• The alternative youth unemployment rate was 20.6%, up 1.8 percentage points from the previous quarter.

[I]t is true that there are 286,000 students who are looking for part-time jobs but who are classified as unemployed. As the table (below) shows, there has been a growth of 32,000 in this number since the third quarter of 2010 (Q3 2010), not least because students who are paying tuition fees are likely to be short of cash. (I take all data from Q3 2010 as the coalition's to own.) However, the other side of this coin is that there are 811,000 students employed part-time who are counted in the employment count. If you remove those in full-time education who are looking for a job, you should also remove all of those who hold a part-time job from the employment count. It's as daft as that."

• The headline unemployment rate (on the ILO definition) rose to 8.3% between August and October 2011. This represents an increase of 0.4 percentage points on the rate recorded for the previous quarter (7.9%).
• The number of unemployed people rose by 128,000, to 2.64 million.
• ONS comments: "The unemployment rate is the highest since 1996 and the number of unemployed people is the highest since 1994."
• A breakdown of the number of unemployed people by gender reveals the following: "The number of unemployed men was 1.53 million in the three months to October 2011, up 83,000 from the three months to July 2011. The number of unemployed women was 1.10 million in the three months to October 2011, up 45,000 from the three months to July 2011."
  

The number of people employed in the public sector fell by 67,000 between June and September 2011 to reach 5.99 million, the lowest figure since September 2003. The number of people employed in the private sector increased by 5,000 on the quarter to reach 23.12 million.

• The number of unemployed 16 to 24 year olds in the UK rose to 1.03 million over the three months to October 2011. This represents an increase of 54,000 on the previous quarter.
• The youth unemployment rate rose to 22.0% over the three months between August and October 2011, an increase of 1.2 percentage points on the preceding quarter's rate (20.8%).
• ONS comments: "The unemployment level and rate for people aged from 16 to 24 are the highest since directly comparable records began in 1992. However earlier data, calculated on a slightly different basis, indicates that the level of youth  unemployment was higher in the mid-1980s."
  

Firms have been betting on recovery. They did not want to get rid of workers only to have to hire them again when things picked up. They were keen to recruit, so as to be well placed as the recovery built up momentum. [W]hat we have seen in recent months, I fear, is capitulation on both fronts. Businesses that hoarded labour have come to regret it and are now throwing in the towel. Those that recruited are no longer doing so and in some cases are laying people off. Confidence in the recovery has evaporated, and with it the hopes for many in the job market.

General government employment is expected to fall further than we predicted in March, primarily because of the additional spending cuts pencilled in for 2015-16 and 2016-17 in the Autumn Statement. There is some evidence that public sector employers are front-loading expected job reductions.

Report on jobs out.Worst perm figures for over two years. Some sectors eng and IT doing well and temp Market holding up.

[Our research] highlights a rapidly declining jobs market. The market has been slowing since May but this slowdown has accelerated in the autumn. This is being driven by the double whammy of falling business and consumer confidence. This is bad news for those out of work and, as a consequence, we expect unemployment to rise in December and January. On a positive note, however, the report shows that temporary staff appointments are still growing, albeit at a decreasing rate.

• XpertHR economic commentary December 2011: In the bleak midwinter

• XpertHR economic commentary December 2011: In the bleak midwinter

• XpertHR economic commentary December 2011: In the bleak midwinter

The landscape is fundamentally transformed. A government that promised to eliminate the budget deficit by the next election has admitted that it will fail. It now says it needs another two years to meet its deficit target. And what's more, to do that, it needs to inflict yet more pain - a squeeze on tax credits and further pay restraint for the public sector. There will be more spending cuts in the years after the election."

[T]he battle at the next election will [now] be about which party can best complete the job of fixing the economy.

• The state pension age will rise from 66 to 67 from 2026, in order to secure "a long-term future for the basic state pension".
• Public sector pay rises will be capped at an average of 1% following the end of the current two-year pay freeze (which concludes in either April 2012 or April 2013, depending on department).
• The independent pay review bodies will report by July 2012 on measures to make public sector pay more responsive to local labour markets.
• Osborne called for evidence on a range of employment law reforms, including: introducing Compensated No-Fault Dismissals - an idea originating from Adrian Beecroft's leaked report setting out radical measures to boost growth - for micro-businesses with fewer than 10 employees; and a simplified dismissal process, including a revised Acas code of practice. One week prior to the Autumn Statement, the Coalition Government had unveiled a package of proposals comprising what it described as "the most radical reform to the employment law system for decades." XpertHR provides complete details of these proposals.
  

The economy has grown less strongly this year than we forecast in March, primarily because higher-than-expected inflation has squeezed household incomes and consumer spending. Business and consumer surveys point to further weakness in the fourth quarter.

[The OBR] does not predict a recession in the UK, instead forecasting 0.9% GDP growth in 2011 and 0.7% in 2012. By 2015 and 2016 growth is expected to be at 3%. Key reasons for the reduction in the OBR's forecasts include the effects of unexpected external inflation shocks - energy price and commodity price rises - which "explains the slowdown in growth in Britain in the past 18 months". In addition, the pre-recession "unsustainable boom" was bigger than previously thought and the bust was consequently bigger too.

• inflation has begun to fall back;
• the UK economy has posted better-than-expected (but nonetheless weak) growth; and
• the gap between pay awards and inflation has narrowed slightly.
  

• XpertHR economic commentary December 2011: In the bleak midwinter

"Even under the best economic scenario a programme of austerity should be at least a two-term project with the first term emphasising deficit reduction and the second consolidating the gains. [...]This does not mean that the UK necessarily faces a "lost decade", in Christine Lagarde's phrase. By playing its cards right, the UK could create a stronger and fairer economy. But this will require making tough decisions and being clear on where government can add value, and where it does not. After all, real growth will not come from government but from a dynamic, highly productive economy."

This does not mean that the UK necessarily faces a "lost decade", in Christine Lagarde's phrase. By playing its cards right, the UK could create a stronger and fairer economy. But this will require making tough decisions and being clear on where government can add value, and where it does not.

The Government is right to recognise that the burden of employment  regulation has to be reduced. The employment law review is a good step and its aim should be to make it easier to hire and fire staff. For this reason the Government should be open to the ideas in the unpublished "Beecroft Review," such as a weakening of unfair dismissal regulations. As the Department of Business, Science and Innovation has itself shown smaller firms are being deterred from making appropriate dismissals and fighting claims because of the costs of employment tribunals.

The Government is introducing changes to work laws that include charging fees for employment tribunals and extending the qualification period for the right to claim unfair dismissal from 12 months to two years.

• The Bank of England's latest quarterly Inflation Report suggested that growth might be expected to flatline in the opening quarters of 2012. The report suggests that UK GDP growth will come in at around 1% over 2012 as a whole.
  
• "[T]he risk of a recession has risen, [but] our forecast suggests that two consecutive quarters of negative growth will be avoided. However, it is likely that growth will almost stall over the winter." This is according to the CBI, which expects growth to come in at 0.9% for 2011 as a whole, and has cuts its expectations for UK GDP growth in 2012 from 2.2% to 1.2%. 

• David Cameron this week hosted a business breakfast meeting on youth unemployment.
• Employment Minister Chris Grayling promises "additional measures to support growth and create employment opportunities, especially for young people" from Chancellor George Osborne's autumn statement (which will be delivered on Tuesday 29 November 2011).
  

[T]he Government is [...] lobbying the International Labour Organisation [ILO] to remove students in full-time education from the headline total of youth unemployment. Just over 286,000 students are included in the figures.

• There are now 1.02 million unemployed 16 to 24 year olds in the UK. This figure is up by 67,000 from the figure recorded for the three months to July 2011. ONS says: "The unemployment level and rate for people aged from 16 to 24 are the highest since directly comparable records began in 1992. However earlier data, calculated on a slightly different basis, indicates that the level of youth unemployment was higher in the mid-1980s."
• The youth unemployment rate was 21.9% over the three months between July and September 2011, representing an increase of 1.7 percentage points from the previous quarter's rate.
• In addition to the internationally-accepted youth unemployment measure, the ONS also reports an alternative measure of youth unemployment. This measure - which was introduced in its April 2011 data release, in response to pressure from Iain Duncan Smith - measures the youth unemployment rate "excluding people in full-time education." According to this measure, there were 730,000 unemployed 16 to 24 year olds between July and September 2011. This figure was up 58,000 on the quarter. ONS says: "The unemployment rate for 16 to 24 year olds not in full-time education was 20.6% of the economically active population, up 1.8 percentage points from the three months to June 2011."
  

With the economic outlook the gloomiest it's been since the end of the recession the bleak prospects facing young jobseekers look set to be with us for some considerable time to come, unless the government changes course now and brings in immediate measures to support jobs and growth.

• Unite General Secretary Len McCluskey argues that "the Government has created a lost generation of young people unable to gain a foothold on the employment ladder." He says: "The Government needs to adopt a twin-track policy - having more targeted measures to help young people into work, while at the same time, reversing the hardline austerity measures that have sucked the life out of the British economy. One way forward would be to ensure that a greater percentage of apprenticeships should go to those aged under 25."
• CBI Director-General John Cridland says: "These figures underline why we need urgent action to help our young people take their first steps in the labour market. [...] The Chancellor should use his autumn statement to announce a Young Britain Credit, worth £1500, to encourage firms to take on an unemployed 16- to 24-year-old. We also need further steps to reform the benefits system to make work really pay and to foster better links between businesses and schools to boost the attractiveness of young people in the labour market."
  

With the economic outlook the gloomiest it's been since the end of the recession the bleak prospects facing young jobseekers look set to be with us for some considerable time to come, unless the government changes course now and brings in immediate measures to support jobs and growth.

• The image used in this post was sourced from Wikimedia Commons.
  

[Inflation] is likely to be at, or close to, the peak, and we expect inflation now to start to fall back, as it did in the months following the peak in inflation in September 2008. [...] So it is the outlook for inflation, rather than its current rate, which explains the MPC's decision to resume asset purchases.

The average prediction for [CPI] inflation in 2012 is now 2.5%, less than half of the latest figure. Unfortunately, they expect inflation to fall for the same reason it fell after 2008 - because of weakening demand in the UK and broader global economy.

While inflation has remained elevated and is likely to stay above 2% for some months to come, inflation rates are expected to decline further in the course of 2012 to below 2%. [...] After today's decision [to cut euro area interest rates to 1.25%], inflation should remain in line with price stability over the policy-relevant horizon. [...] The economic outlook continues to be subject to particularly high uncertainty and intensified downside risks. Some of these risks have been materialising, which makes a significant downward revision to forecasts and projections for average real GDP growth in 2012 very likely. In such an environment, price, cost and wage pressures in the euro area should also moderate; today's decision takes this into account. Overall, it remains essential for monetary policy to maintain price stability over the medium term, thereby ensuring a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. Such anchoring is a prerequisite for monetary policy to make its contribution towards supporting economic growth and job creation in the euro area.

• See: XpertHR economic commentary November 2011: For a few billion pounds more.
  

It's known as credit easing. It's another form of monetary activism. It's similar to the National Loan Guarantee Scheme we talked about in opposition. It could help prevent another credit crunch; provide a real boost to British business; and over time help solve that age old problem in Britain: not enough long term investment in small business and enterprise. And if this party is anything, it is the party of small business and enterprise."

Credit easing will at first see the Government inject billions of pounds into the corporate bond markets by buying bonds in larger companies, but the Chancellor then hopes to create a small and medium sized enterprise (SME) bond market, encouraging banks to package up parcels of debt issued by smaller companies. Treasury officials are understood to have been in contact with the LSE to see if a retail bond platform might provide the model to connect SMEs with potential investors. The LSE's ORB market - which stands for "order book for retail bonds" - opened for business in February 2010, and has rapidly grown to become a viable platform.

• For further details, see: XpertHR economic commentary November 2011: For a few billion pounds more

• The image on this page was sourced from Wikimedia Commons.
• A tip of the hat to @VictorianLondon, for tweeting a link to the Cat's Meat Shop blog post.

In the United Kingdom, the path of output had been affected by a number of temporary factors, but the available indicators suggested that the underlying rate of growth had moderated and would be close to zero in the fourth quarter. Household spending had been weak for some time and in the second quarter of 2011 had been only marginally higher than at its trough two years earlier. The squeeze on households' real income and the fiscal consolidation were likely to continue to weigh on domestic spending.

• Retail prices index (RPI) inflation accelerated to 5.6% in September 2011, up 0.4 percentage points on the rate recorded one month previously (5.2%). RPI therefore remains significantly higher (by a factor of 3.6 percentage points) than the headline pay award as measured by XpertHR (which is worth 2% over the three months to 31 August 2011). ONS says that today's RPI reading is "the highest RPI annual inflation rate for over 20 years (it was last higher in June 1991 when it stood at 5.8 per cent)."
• Consumer price index (CPI) inflation continues to rise further above the 2% target rate, hitting a record high of 5.2% in September 2011 (up from 4.5% in August). Today's CPI rate equals the record high set in September 2008. ONS notes that: "By far the largest upward pressure to the change in CPI annual inflation between August and September came from increases in gas and electricity charges."
  

ONS say weak GDP due to: low consumer demand; shaky labour mkt; inflation; weak global ecnmy; volatile financial mkts; low returns on saving

For 2011 as a whole, it now looks likely that UK GDP growth will average 1% or less, reflecting the wide range of shocks to the global and European economies this year.

• XpertHR economic commentary October 2011: Welcome to the low-growth world

It's known as credit easing. It's another form of monetary activism. It's similar to the National Loan Guarantee Scheme we talked about in opposition. It could help prevent another credit crunch; provide a real boost to British business; and over time help solve that age old problem in Britain: not enough long term investment in small business and enterprise. And if this party is anything, it is the party of small business and enterprise.

• The private sector is failing to replace jobs lost in the public sector, ONS reports. Public sector employment fell by 111,000 over the three months to June 2011, while private sector employment rose by 41,000 over the same period.
• The headline unemployment rate (on the ILO definition) rose to 7.9%, while the youth unemployment rate hit 20.8%.

• Read more: XpertHR economic commentary October 2011: Welcome to the low-growth world.

The point is that the UK's economic recovery is weak, and has been weak in precisely the ways that fit with a mainstream view of what happens following a financial crisis. Given that dynamic, there is no reason to think that there will be sustained higher inflation in the UK.

• Read more: XpertHR economic commentary October 2011: Welcome to the low-growth world

The main argument against [further quantitative easing] will have been the inflation picture in the UK and, as such, we maintain the view that the Bank of England will sit on its hands until the BoE meeting in November during [the results of which will be announced on Thursday 10 November 2011] which it will have the Quarterly Inflation Report to consult.

• For more on interest rates, quantitative easing and the wider UK and global economic situation, see XpertHR economic commentary October 2011: Welcome to the low-growth world.

• XpertHR economic commentary October 2011: Welcome to the low-growth world

The National Institute interprets the term "recession" to mean a period when output is falling or receding, while "depression" is a period when output is depressed below its previous peak. Thus, unless output turns down again, the recession is over, while the period of depression is likely to continue for some time. We do not expect output to pass its peak in early 2008 until 2013.

• The image used on this page was sourced from Wikimedia Commons.

• The headline unemployment rate (on the ILO definition) stood at 7.9% over the three-month period from April to June 2011, up by 0.1 percentage point when compared with the previous rolling three-month period (7.8%).
• The number of unemployed women hit a 23-year high. ONS says: "The number of unemployed women increased by 21,000 on the quarter to reach 1.05 million, the highest figure since the three months to May 1988."
  
• The number of people unemployed for up to six months was 1.23 million over the three months to June 2011, representing an increase of 66,000 on the quarter. ONS comments: "This is the largest quarterly increase in this series since the three months to June 2009."
  
• The youth unemployment rate was 20.2% in June 2011, up by 0.2 percentage points from 20.0% in the previous rolling quarter.
• ONS reports that "The number of employees and self-employed people working part-time because they could not find a full-time job increased by 83,000 on the quarter to reach 1.26 million, the highest figure since comparable records began in 1992." This is the second consecutive month in which this measure has registered an unwelcome record high.
  

• See: XpertHR economic commentary September 2011: Icebergs and tectonic shifts
  

Osborne's problem is that growth is currently so slow that even a few tenths of a percentage point can make the difference between expansion and contraction.

This Government's Plan for Growth included lower corporate tax rates, less regulation for small companies, welfare reform, improvements to the planning system and lower taxes for entrepreneurs. We will take further action this autumn. Indeed, this crisis provides an opportunity to make some difficult trade-offs in favour of growth that might get parked in the 'too difficult' box in calmer times.

• See: XpertHR economic commentary September 2011: Icebergs and tectonic shifts.

A balance sheet recession emerges after the bursting of a debt-financed asset price bubble that leaves many private sector balance sheets with more liabilities than assets. [...] The economy will not enter self-sustaining growth until private sector balance sheets are repaired. Fiscal consolidation should begin only after it is ascertained that funds NOT borrowed by the government will be borrowed and spent by the private sector.

The lesson from Japan was that, due to the lack of demand in the private sector, the government needed to keep spending to maintain economic growth until the private sector is ready to borrow again. He told the conference that Japanese government spending had helped maintain growth, but added that, at 7.3% of gross domestic product, the UK government's economic stimulus was not enough to cover for the savings of 8.7% of GDP that the private sector had made. 'In the UK I would argue that isn't large enough to stabilise the British economy.'

Compared with Japan's 1990s stagnation, Western output losses have so far been greater and, compared with Asia's late-1990s crisis, the rebound has been a lot more muted. It may be that the Western world will have to get used to a permanently lower level of economic activity than seemed likely just a handful of years ago.

Interest rates are already so low that businesses and consumers may come to expect years of stagnation ahead. If so, the US will have become like Japan, which is in its 17th year of deflation.

• The Observer's William Keegan says: "The Japanese story is a complicated one, but it was not helped by a fiscal tightening when the economy was on the verge of recovery in 1997, in the shape of a sharp rise in VAT that completely wrecked consumer confidence." He argues that similar action from the UK Government in recent months is now taking a similar toll on UK consumer confidence.
  
• The Daily Telegraph's Jeremy Warner quotes "Pimco's Mohamed El-Erian [who argues] that much of the advanced world faces a steady process of "Japanisation". For him, the "new normal" is what Japan has been experiencing for nearly 20 years now." Warner presents his own view of the choices now facing Japan and the west: "So which way forward for Japan? Does it embrace the new global economy, or just resign itself to relative decline and attempting to grow old gracefully? It's a choice which increasingly faces all countries in the developed world."

• The global economy has been buffeted by simultaneous debt crises in the euro area and in the US, with attendant panic in the markets.
• A double-dip recession for the US and Europe is a distinct possibility.
  
• There have been warnings that the UK faces severe risks posed by economic "icebergs," while the global economy is experiencing "tectonic shifts" in the balance of economic power.
• The social fabric of the UK came under extreme strain from riots and disorder in a number of towns and cities, one consequence of which is likely to be a further strain on economic recovery.

• The image above is a public domain image source from Wikimedia Commons.
  

• "The outlook for output growth remains highly uncertain," according to the latest quarterly Inflation Report from the Bank of England. The BBC reports that the Bank of England has cut its forecast for UK growth in gross domestic product (GDP) growth in 2011 to "about 1.5%."
• The International Monetary Fund (IMF) predicts a "bumpy and uneven recovery" for the UK. It expects GDP growth to average 1.5% in 2011, before accelerating to 2.5% in 2012.
• "Subdued domestic demand will hinder any meaningful recovery this year," according to NIESR. It predicts that GDP will rise by 1.3% in 2011, and by 2% in 2012.
  

The Metropolitan Police have 400 uniformed officers in their human resources department. Our police officers should be crime fighters, not form-fillers, and that's what needs to change.

The Metropolitan police are expecting to cope with budgetary cuts of £543m over four years, meaning a reduction in police and support staff from 32,500 to 30,600.

I too would like to ask the prime minister and mayor of London who they think are directing the police by sifting through intelligence and identfying potential vulberable locations for disorder? It's not the front-line staff that they promise will not be cut but the backroom staff who they are offering no such promise about! Every intelligence researcher across London was offered voluntary redundancy in the last two months.

The basic problem is that the world is going through a tectonic shift in economic power from the West to the East, but our expectations and desires have not adjusted to this changing reality. More specifically, the imbalances in world trade and growth over the last decade have been hidden from the average voter by the ability of the West to borrow. [T]he economic tide has turned against us. [...] We were in trouble before and we still are.

The writing is on the wall for America and the long period of western dominance is drawing to a close.

The additional bank holiday for the royal wedding; The royal wedding itself; The after-effects of the Japanese tsunami; The first phase of Olympic ticket sales; and Record warm weather in April.

Life in Britain is about to become very tough.

• The image above was sourced from Wikimedia Commons.
  
• XpertHR Economic Commentary August 2011: An absence of decent growth

Businesses with low or no profitability which are accordingly unable to generate sufficient cash flow to repay borrowings. [...] Zombie businesses are stuck in a kind of corporate purgatory, unable to live and unable to restructure and move on.

Osborne presser: "considerable economic uncertainties in the economy. There are risks to current and future growth." A hint re tomrw's gdp?

• CIPD on 'Osbornomics': 'The policy trajectory was wrong to begin with'

The number of employees and self-employed people working part-time because they could not find a full-time job increased by 80,000 on the quarter to reach 1.25 million, the highest figure since comparable records began in 1992.

[T]he situation is dire for anyone without a job. Employers are biding their time, waiting for signs of an upturn before taking on full-time employees.

• Retail prices index (RPI) inflation rose by 5.0% over the 12 months to June 2011. This is down 0.2 percentage points from 5.2% a month ago. But while RPI has shown a slight fall, it remains 3.0 percentage points above the headline pay award (which stands at 2.0%, according to latest analysis from the XpertHR pay databank).
• Consumer prices index (CPI) inflation - the Government's target measure - rose by 4.2% in June 2011, down 0.3 percentage points on the previous month's figure (4.5%). Despite this fall, CPI remains at a level that is more than double the Government's target rate of 2%. BBC Chief Economics Correspondent Hughy Pym notes via Twitter that the fall in CPI reflects tough trading conditions for the UK's high street retailers.
  

Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.

• For more, on prospects for the US economy, and their possible ramifications for the UK, see: XpertHR economic commentary July 2011: What can we expect from the second half of 2011?