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History > 2012 > UK > Economy (I)




UK risks triple-dip recession,

Mervyn King warns

Persistently low growth will last
until the next election,
Bank of England governor warns
as he cuts 2013 growth forecast to 1%


Wednesday 14 November 2012
13.46 GMT
Josephine Moulds
This article was published on guardian.co.uk at 13.46 GMT
on Wednesday 14 November 2012.It was last modified at 15.05 GMT
on Wednesday 14 November 2012.


The UK economy risks suffering from a triple-dip recession amid a period of persistently low growth that will last until the next election, the governor of the Bank of England has warned.

Sir Mervyn King cut Britain's growth forecast to 1% next year and warned that output was more likely than not to remain below pre-crisis levels over the next three years. "There seems a greater risk that the UK economy may be in a period of persistent low growth," he said on Wednesday.

The UK economy emerged from a double-dip recession in the third quarter of this year, when the economy grew by 1%, but King warned that this was driven by one-off factors. "Continuing the recent zig-zag pattern, output growth is likely to fall back sharply in the fourth quarter as the boost from the Olympics in the summer is reversed – indeed output may shrink a little this quarter," he said. If that period of contraction continues into 2013, the UK could drop into a triple-dip recession.

At the same time, the Bank significantly raised its inflation forecasts. Inflation is now is expected to reach around 3% in the near-term and not fall back significantly until the second half of 2013, later than previously thought.

UK inflation jumped to a surprise five-month high of 2.7% last month, driven by rises in tuition fees and dearer food bills. Energy price rises over the next few months are likely to drive it even higher.

King said the outlook for inflation was the main reason why the monetary policy committee decided not to expand the quantitative easing (QE) programme in November. He said there were limits to what monetary policy could do to boost an economy undergoing far-reaching adjustments in the wake of the financial crisis and amid severe headwinds from the eurozone debt crisis.

But economists said the bank may still engage in more QE in the future. Howard Archer of IHS Global Insight said: "With economic recovery currently looking feeble, fragile and far from guaranteed, we believe that the Bank of England will ultimately decide to give the economy a further helping hand with a final £50bn of QE. This seems most likely to occur in the first quarter of 2013."

Labour said this gloomy outlook proved the coalition government's economic plans were not working. The shadow chancellor, Ed Balls, said: "This sobering report shows why David Cameron and George Osborne's deeply complacent approach to the economy is so misplaced. Their failing policies have seen two years of almost no growth and the Bank of England is now forecasting lower growth and higher inflation than just a few months ago."

    UK risks triple-dip recession, Mervyn King warns, NYT, 14.11.2012,






In Britain, Austerity Collides With Pension System


September 20, 2012
The New York Times


LONDON — It may be the age of austerity for many in Britain. For a former doctor, Geoffrey Lipman, it is anything but.

Dr. Lipman’s annual government pension of £48,000, or nearly $78,000, nicely supplements the £144,000 tax-free payment he received when he retired from Britain’s National Health Service in 2007 after 35 years of service.

He also makes use of the wide menu of universal benefits available to older Britons — including free bus travel and annual payments of £200, or $324, to defray winter heating costs. Next month, when he turns 65, he will qualify as well for a second government pension payout of £104 a week, plus a £10 bonus at Christmas.

Dr. Lipman’s payments are emblematic of what Britain’s Conservative prime minister, David Cameron, is up against, having hitched his political fortunes to the coalition government’s ability to cut the national budget. Despite Mr. Cameron’s efforts to curb public outlays and reduce one of Europe’s biggest budget deficits, government spending is higher than when he took office two years ago. This continues a climb that began with the creation of the British welfare state after World War II.

The cuts Mr. Cameron has made — a public sector pay freeze, a reduction in outlays for local governments and cutbacks in personnel at government ministries, to name a few — have drawn howls of protest. The outcry has come from unions; the Labor Party, which now has a strong lead in the polls; and even a growing faction of Tory-supporting business leaders.

But overall government spending, as a portion of the economy, continues to rise. It is projected to approach £700 billion this year, or about 45 percent of gross domestic product, compared with 38 percent a decade ago. That is partly a result of social benefits, mainly for the elderly, that are deemed politically off-limits and are being propelled up by a demographic curve that will add millions of Britons to the retiree ranks in coming years.

“Austerity is just not a word that I recognize,” said Dr. Lipman, who since retiring from full-time work as a family doctor in the northern city of Leeds has upgraded the car he drives to a Mercedes. “I would not say that I am worried financially.”

The issue in some ways parallels the challenge facing the United States, where growing numbers of retiring baby boomers threaten to bankrupt the Social Security and Medicare systems within decades unless those systems are revamped. And as in the United States, because people still working are paying for retirees’ benefits that are more generous than younger people can expect to receive, the budget struggle has elements of a generational dispute.

Younger doctors in Britain do not expect to receive the same benefits as Dr. Lipman. This year they held a one-day strike to protest the government’s decision to raise their retirement age and their pension contributions.

In Britain, “the welfare state can no longer carry this burden,” said Angus Hanton, an economist and a member of the advisory board of the Intergenerational Foundation, which advocates on behalf of younger Britons.

With British tax revenue remaining weak because of an economy that is forecast to shrink 0.5 percent this year, it is becoming ever more likely that Mr. Cameron’s government will miss its goal of cutting the deficit this fiscal year to £120 billion, from £126 billion last year.

The International Monetary Fund estimates that Britain will have a deficit this year of 8.1 percent of G.D.P., surpassing Spain and even Greece and trailing only Ireland among the distressed euro zone economies.

Opposing politicians — and some economists — have accused Mr. Cameron of destroying any chance for economic recovery by sticking to his austerity platform. He faces growing pressure to reverse course.

“We have not gone far enough — you can keep the welfare state as long as you have economic growth, and this is not happening,” said Tim Morgan, an economist at the brokerage firm Tullett Prebon in London who tracks government spending patterns.

For now, many bond investors are disregarding Britain’s deficit. Continuing to see the pound as a haven from woes in the euro zone, they are lending money to Britain for 10 years at an interest rate only slightly higher than Germany’s 1.6 percent.

But at least one hedge fund manager, Ben Davies of Hinde Capital, is betting against British bonds. “The government has this austerity program, but spending and debt continue to increase,” Mr. Davies said. “It’s very disingenuous, and I think by the end of the year the market will question whether the government can truly implement these cuts.”

Driving this increase has been spending on entitlements, which Mr. Morgan calculated to be 50 percent of spending last year, if interest payments on government debt were not counted. Benefits for Britons older than 60 are substantial. Retirees receive the winter heating payments regardless of income or where they live, even in the not-so-chilly south of France or coastal Spain. When they turn 75, retirees no longer have to pay the annual £145 fee that other British households pay for using a television.

Many economies in Europe, of course, say they are under pressure from benefit payments and are making cutbacks. But the strain on the British Exchequer is particularly intense because the benefits include some of the most generous pension plans in Europe. That is especially so for retired government employees.

According to research by the Intergenerational Foundation, about 100,000 public sector retirees receive pensions that exceed the country’s average annual wage of £25,900. Those ranks are expected to increase sharply in coming years as more senior government workers retire.

Not all of the 670,000 people collecting pensions from the National Health Service live at Dr. Lipman’s level. Many were lower-paid health service professionals — including support staff and nurses — who receive close to the national public sector pension average of £7,000 a year.

But the foundation’s research found that the richest payouts went to retirees from the health profession, with some doctors receiving pensions of as much as £100,000 annually.

“The total liability for these government pensions is £1.3 trillion,” or more than $2.1 trillion, said Mr. Hanton, the economist who helps advise the Intergenerational Foundation.

The Cameron government has put in place changes that will require younger working doctors to increase their pension contributions to 14 percent of their salary by 2014. Dr. Lipman had to contribute 4 percent from the £100,000 a year he earned on average as a doctor.

It has also put in place the second increase in doctors’ retirement age since 2008, raising it to 68 from 65. It was 60 when Dr. Lipman left the work force.

Because this year’s changes affect only doctors younger than 47, any near-term savings will not be substantial. The effect is most profound on the doctors themselves. That is why the British Medical Association called for a strike in late June, the first time doctors here had taken such action in 40 years.

“We are really angry,” said Dr. David Wrigley, 43, who works in the Lancashire region of northwest England.

Under National Health Service guidelines, for his 15 years of experience, Dr. Wrigley qualifies for a yearly salary of around £85,000, about $138,000 at today’s exchange rates. He acknowledges that even with the new rules, doctors will remain well compensated compared with other public sector professions.

But he says the latest changes seem to single out doctors.

“When you first joined the N.H.S. you signed a moral contract to work until you are 60 and then get your pension,” Dr. Wrigley said. “Now that is being taken away.”

But not from retirees like Dr. Lipman, whose pensions will not be affected.

“We have a lifestyle that is very good,” said Dr. Lipman, who is married and has two grown daughters. “We just got back from Tuscany, we are going to Portugal in three weeks, the Canary Islands for New Year’s and are planning a trip to South Africa after that.”

That, he concedes with a chuckle, is the beauty of a legacy-style N.H.S. pension. “You get paid £48,000 a year to do nothing.”

This article has been revised to reflect the following correction:


Correction: September 20, 2012

An earlier version of this article misstated the frequency of £200 payments

to older Britons to defray winter heating costs. They are yearly, not monthly.

    In Britain, Austerity Collides With Pension System, NYT, 20.9.2012,






Debt crisis:

emergency action revealed to tackle

'worst crisis since second world war'

Sir Mervyn King announces emergency measures to help UK banks
and boost business lending by at least £80bn


Thursday 14 June 2012
21.14 BST
Larry Elliott, Jill Treanor and Ian Traynor in Berlin
This article was published on guardian.co.uk at 21.14 BST on Thursday 14 June 2012. A version appeared on p1 of the Main section section of the Guardian on Friday 15 June 2012. It was last modified at 01.05 BST on Friday 15 June 2012.

Sir Mervyn King has announced emergency measures to help banks and boost business lending after a warning from George Osborne that the "debt storm" raging on the continent had left the UK and the rest of Europe facing their most serious economic crisis outside wartime.

In a joint proposal between the Bank of England and the Treasury, banks will receive cut-price funds provided they pass on the benefits to their business customers.

This new "funding for lending" scheme could provide an £80bn boost to loans to the private sector within weeks and alleviate growing fears of a second slump since the start of the financial crisis in 2007.

In a second scheme the Bank will begin pumping a minimum of £5bn a month within the next few days into City institutions to improve their liquidity.

With one Spanish minister warning that the future of Europe could be decided within hours, both the governor and the chancellor used the backdrop of another day of financial and economic turbulence in the eurozone to express deep concern about the threat to Britain posed by Europe.

As interest rates on Spain's 10-year borrowing hit the 7% level and Angela Merkel insisted she was running out of patience with her fellow eurozone policymakers, King told a City audience at the Mansion House, London, that there was a "large black cloud of uncertainty hanging over not only the euro area but our economy too, and indeed the world economy as a whole".

Osborne said things were likely to get worse in the eurozone before they got better and insisted that the time for decisions had come. Strongly defending the government's handling of the economy, the chancellor said it had been the hard-won credibility built up over the past two years that had allowed the Treasury and the Bank to take action.

Thursday night's announcements were designed to shore up confidence before this weekend's elections in Greece, seen as a possible trigger point for a new phase in Europe's debt crisis.

In a speech to parliament in Berlin presaging a fortnight of crucial elections and summitry in Europe, an exasperated Merkel bluntly told the rest of Europe to get real about the crisis, dismissed calls for Berlin to share responsibility for other euro countries' debt, and rejected charges that Germany was not doing enough to stabilise the euro.

"Germany's strength is not unlimited," Merkel warned. "The way out of the crisis in the eurozone can only be successful if all countries are capable of recognising the reality and realistically assessing their strengths."

Merkel's uncompromising remarks came as Spain's foreign minister, José Manuel García Margallo, said: "The future of the European Union will be played out in the next few days, perhaps in the coming hours."

According to a report in the Spanish newspaper El País, García Margallo said: "The three months that [IMF boss Christine] Lagarde gave is possibly too long."

García Margallo called on the European Central Bank to buy Spanish bonds, and there was market speculation that the central bank had stepped in as the yield on the 10-year bond fell back below the 7% mark that had sent alarm bells ringing in the financial markets. In a dig at Germany, he added: "If the Titanic sinks, it takes everyone with it, even those travelling in first class."

Merkel expects to come under pressure when the G20 group of developed and developing countries meets for its summit in Mexico on Monday.

"Once again Germany will be the centre of attention," the German chancellor said, adding that some of the formulas being proposed for saving the euro using German money would simply amount to illusory short-lived fixes condemning Europe to a future of high debt and economic mediocrity.

Spanish government sources said the European council president, Herman Van Rompuy was due to meet Spanish prime minister Mariano Rajoy, Merkel, Italy's Mario Monti and French president François Hollande at the G20. Barack Obama, who has been pressing eurozone countries to act quickly to sort out the debt crisis, was also expected to meet the five eurozone leaders in Mexico. David Cameron may also join the meeting.

King raised the prospect on Thursday night that the eurozone would not emerge from the crisis intact. Noting that funding costs for UK banks were already going up as a result of the problems faced by the weaker nations of monetary union, the governor said: "Any significant redenomination of their currencies, or a default on domestic debts, would, both directly and as a result of the consequences for all our economies, put a dent in the capital position of our banks. As a result, investors demand a higher risk premium on loans to banks, pushing up the cost of borrowing for homeowners and businesses."

Underlining his concern about the pressures on UK financial institutions, the governor said Threadneedle Street would provide as much cash as banks required "given the turbulence ahead".

Osborne said the Bank and the Treasury were taking co-ordinated action to inject new confidence into the financial system and support the flow of credit to the real economy.

"We are not powerless in the face of the eurozone debt storm. Together we can deploy new firepower to defend our economy from the crisis on our doorstep. The government, with the help of the Bank of England, will not stand on the sidelines and do nothing as the storm gathers."

    Debt crisis: emergency action revealed to tackle 'worst crisis since second world war', G, 14.6.2012,






Britain's economy sinks into longest depression for 100 years

Slump in financial services, building and the high street

mean it is unlikely economic growth can be regained until 2014


Thursday 26 April 2012
The Guardian
Phillip Inman, economics correspondent
This article appeared on p14 of the Main section section of the Guardian on Thursday 26 April 2012. It was published on guardian.co.uk at 00.02 BST on Thursday 26 April 2012. It was last modified at 00.16 BST on Thursday 26 April 2012.


Britain's economy has sunk into recession for the second time in three years after a dramatic slump across the financial services and construction sectors and a poor start to the year on the high street.

Official figures showed the economy contracted in the first three months of the year after a poor performance before Christmas. This meant it registered two consecutive quarters of negative growth, the standard definition of a recession. The economy is now in its longest depression for 100 years, with little sign of regaining its previous record output before 2014.

A silver lining was provided by a CBI survey of the manufacturing sector that pointed to a recovery in sales and confidence, albeit from one of its worst slumps on record in January. And a survey by the British Retail Consortium found an increasing willingness by shop owners to hire workers. More than 3,000 jobs were created, mainly by large supermarkets opening new stores.

But HSBC, Britain's largest bank, offset this news when it announced plans to shed 2,000 staff in its UK retail division over the next year as part of a worldwide redundancy programme. Banks have cut thousands of jobs in the past few years to reduce costs and cope with a sharp slowdown in business caused by the financial crisis and subsequent drop in lending.

The business and financial services sector fell by 0.1% in the first three months of the year. The once all-powerful financial services sector, which accounts for a whopping 29% of GDP, "made the largest negative contribution", according to the Office for National Statistics.

The CBI said it was concerned that poor GDP figures would persuade other employers that a recent improvement in sentiment across several sectors was misplaced, leading them to reverse plans to add jobs and increase investment. Forecasters have pencilled in growth of around 0.8% this year followed by a jump to 2% next year. But several economists argue that, without a rethink of its austerity measures by the Treasury and limited plans for investment, growth could evaporate next year as quickly as it did over the past two years.

After a series of small ups and downs, output has flatlined since September 2010, according to the ONS, shortly after the coalition government took office. Its latest survey of output showed a contraction of 0.2% in the first quarter after a 0.3% decline in the last three months of 2011.

Several European countries have been hit by double-dip recessions following turmoil in the eurozone and the fallout from the Greek crisis. Italy, Spain, France and the Netherlands have all seen growth turn negative in the past six months. Spain, in particular, is expected to remain in difficulty throughout the year as it wrestles with soaring unemployment, rising debt levels and a fall in consumer spending after wage and benefit cuts.

Concern over Spain's future and the possibility it will need a multibillion-euro bailout from Brussels and the International Monetary Fund has weighed heavily on global growth. While the situation in the UK is less acute, the government could face a similar squeeze towards the end of the year once welfare benefit cuts, limits on tax credit payments and persistently high inflation have taken their toll.

Pay rises have lagged behind inflation for more than two years, cutting disposable incomes and hurting high street spending, with a knock-on effect for the Treasury in lower tax receipts. But the US economy has grown strongly. Ben Bernanke, the central bank chief, said on Wednesday that the outlook remained on course for moderate growth, although he cited Europe as a reason to be cautious. The US economy is expected to have grown 2.5% in the first quarter when estimates are published on Friday. The ONS said that Britain's service industries, which make up more than three-quarters of the economy, grew by just 0.1% in the first quarter, after declining by 0.1% in the fourth quarter of last year. Industrial output was 0.4% lower, while construction shrank by 3% – the biggest drop since the start of 2009.

Like the US Fed, the Bank of England has refrained from pumping more money into the economy under its quantitative easing programme, which currently stands at £325bn.

"The biggest surprise – and perhaps the most worrying element of this report – was the disappointment in services output," said Alan Clarke at Scotia bank. "Ironically, construction, which had the most potential to determine whether or not the UK is in recession, proved much less negative than feared. The Bank [of England] recently highlighted that it cares most about underlying growth. Our gauge of underlying GDP showed zero growth – still very disappointing."

The GDP figures conflict with other recent surveys, which have painted a steadily improving economic picture.Economists also question the reliability of the construction numbers. Joe Grice, the statistics office's chief economist, said the bigger picture is that the UK economy, in volume terms, was flat between January and March compared with the same period last year. Looking at the UK since last summer, he added that the picture is of "a flattish economy". Britain is the first major economy to report GDP data for the first quarter of 2012.

    Britain's economy sinks into longest depression for 100 years, G, 26.4.2012,






Verdict on UK riots:

people need a 'stake in society', says report

Panel concludes that riots were fuelled by a lack of opportunities for young people, poor parenting and suspicion of the police


Wednesday 28 March 2012
The Guardian
Fiona Bawdon
This article appeared on p1 of the Main section section of the Guardian on Wednesday 28 March 2012. It was published on guardian.co.uk at 00.30 BST on Wednesday 28 March 2012. It was last modified at 08.12 BST on Wednesday 28 March 2012.
It was first published at 00.01 BST on Wednesday 28 March 2012.


An independent panel set up by the government to study the causes of last summer's riots calls for more people to be given "a stake in society" to help prevent a repeat of the disturbances.

The report, by the Riots Communities and Victims Panel, concludes that the riots were fuelled by a range of factors including a lack of opportunities for young people, poor parenting, a failure of the justice system to rehabilitate offenders, materialism and suspicion of the police.

"When people don't feel they have a reason to stay out of trouble, the consequences for communities can be devastating – as we saw last August," said Darra Singh, chair of the panel.

The report, released on Wednesday, says: "The key to avoiding future riots is to have communities that work." Recommendations include fines for schools that fail to teach children to read properly; earlier and better support for troubled families; a "youth job promise" to get more young people into work; and primary and secondary schools to "undertake regular assessments of pupils' strength of character".

"The answers lie in different places: some are about personal or family responsibility and others are about what the state or the private or voluntary sectors should do better or differently," it says. "Public services describe a group of approximately 500,000 'forgotten families' who bump along the bottom of society."

The panel, which visited 21 communities and interviewed thousands of people affected by the riots, says its wide-ranging recommendations "must be enacted together" if the risk of further riots is to be reduced.

Singh said: "We must give everyone a stake in society. There are people 'bumping along the bottom', unable to change their lives. We urge party leaders to consider the importance of all of our recommendations. Should disturbances happen again, victims and communities will ask our leaders why we failed to respond effectively in 2012."

The report suggests the government's Troubled Families Programme, set up after the riots, may be aiming at the wrong target. TFP, led by the former "respect tsar", Louise Casey, identified 120,000 families needing intervention to turn their lives around and prevent reoffending.

However, of the 80 local authorities polled by the panel, only 5% thought there was any crossover between families targeted by TFP and the families of rioters. The report raises concerns that some schools are excluding pupils for the wrong reasons. Children should be excluded only as a last resort, and only ever be moved to quality alternative provision. If children leave school unable to read properly, the school should face a financial penalty covering the cost of the child getting the extra help they need at their new school, the report says.

"Every child should be able to read and write to an age-appropriate standard by the time they leave primary and then secondary school," the report says.

"If they cannot, the school should face a financial penalty equivalent to the cost of funding remedial support to take the child to the appropriate standard."

It also urges schools to help children "build personal resilience" to help them avoid getting involved in future rioting. It claims that what often determines whether someone makes "the right choice in the heat of the moment" is "character", which it defines as "self-discipline, application, the ability to defer gratification and resilience in recovering from setbacks".

Local businesses should get more involved with schools to promote youth employment and the government should provide a job guarantee for all young people out of work for more than two years, it says.

The report points out that half the recorded offences in the riots were for looting, often of high-value products, including designer clothes, trainers, mobile phones and computers. It calls for young people to be "protected from excessive marketing" and for the Advertising Standards Authority to work to increase children's resilience to advertising. It recommends the appointment of an "independent champion to manage a dialogue between government and big brands".

The four-member panel – Singh, Simon Marcus, Heather Rabbatts and Lady Sherlock – was nominated by the three main political parties. The report is one of several pieces of research into the causes of the riots. A study by the Guardian and the London School of Economics, based on interviews with 270 rioters, revealed that frustration at the way police engage with communities was a major cause. It also showed that mMany rioters also conceded that their involvement in looting was simply down to opportunism, giving them an opportunity to acquire desirable consumer goods.

Camila Batmanghelidjh, founder of the charity Kids Company, said of Wednesday's report that the 500,000 figure for families in difficulties whose needs were not being picked up was an underestimate. "I'd say it is bigger than half a million, because of the scale of what we are seeing."

She added that the panel had adopted "a middle class model" by suggesting the key to preventing offending lay in working with young people's families. "They are still assuming the young person's family is intact, whereas 84% of the children who come to us are runaways. These children have predominantly been seriously maltreated by their families," she said.

Labour MP Diane Abbott, whose Hackney constituency saw some of the fiercest rioting, said: "I welcome the emphasis the report puts on the social and economic causes of the riots. In the first 48 hours after the riots, it was right to focus on restoring order. But, since then, the prime minister has insisted on putting the riots down to "criminality, pure and simple". This report completely demolishes his kneejerk response ...

"What we have seen really reflects an unspoken crisis in the country's efforts to raise educational standards in some of the inner cities. A number of communities feel they don't have any control over their own lives. They feel harassed by the police and marginalised by their job prospects – and are bombarded with reminders of lives they will, in all likelihood, never have. In the week after we have seen the top rate of tax for millionaires cut and the Conservative party hawking intimate dinners with the prime minister for £250,000 a go, I think communities like mine are absolutely sick of being told 'we're all this together', when it's absolutely clear that we're not all on it together."

Batmanghelidjh said it was "a cheek" to suggest it was character failings on the part of young people that led them to join in the rioting, rather than wider social issues such as deprivation and unemployment.

Shauneen Lambe, executive director at Just for Kids Law, which has acted for numerous young people arrested after the riots, agreed that unemployment and illiteracy played a part. "One of the things that really concerns us is how young people are criminalised in a way that previous generations just weren't – which really blights their job prospects."

The job prospects of the young people convicted following last summer's riots were especially bleak, she said.

Earl Jenkins, a learning support mentor at Calderstones school in Liverpool, who was one of up to 60 youth workers who went on to the streets of Toxteth during the disturbances to persuade youngsters not to get involved, agreed that joblessness was a factor. "If you've got nothing to lose, you'll do what you can to survive, won't you?"

Welcoming the report, the communities secretary, Eric Pickles, said: "My department's Troubled Families programme will tackle some of the most entrenched social problems in our country by getting members of 120,000 families off the streets, back into school and on a pathway to work."

    Verdict on UK riots: people need a 'stake in society', says report, NYT, 28.3.2012,






Half of UK's young black males are unemployed

Unemployment rate for black 16 to 24-year-olds available for work
now double that for white counterparts, ONS data shows


Friday 9 March 2012 18.05 GMT
James Ball, Dan Milmo and Ben Ferguson


More than half of young black men available for work in Britain are now unemployed, according to unpublished government statistics obtained by the Guardian which show the recession is hitting young black people disproportionately hard.

The new figures, which do not include students, also reveal that the youth unemployment rate for black people has increased at almost twice the rate for white 16- to 24-year-olds since the start of the recession in 2008. Young black men are the worst affected of all, according to a gender breakdown contained within the data supplied by the Office for National Statistics.

Unemployment among young black men has doubled in three years, rising from 28.8% in 2008 to 55.9% in the last three months of 2011.

Although the ONS said the gender breakdown should be treated with caution due to a relatively small sample size, the figures brought calls for further government action from business and community figures in the UK.

Iqbal Wahhab, owner of the Roast restaurant in London and chair of the ethnic minority advisory group at the Department for Work and Pensions, said the figures had exposed an issue that has been "like the elephant in the room". Wahhab, who runs his own mentoring scheme for young black youths, urged the government to join businesses in tackling the problem. "Now that the figures are out in the public domain, what are we going to do about it?"

He added: "I would love to see ministers doing more. If it is businesses doing it, that's great, because we are more in tune with how to make programmes run efficiently, but we need to see how the government is going to reverse that tide."
Black unemployment rate Black unemployment rate

According to the ONS, in the last three months of 2008 the unemployment rate for black people aged 16 to 24 was 28.8%. In the most recent quarter in 2011, this had risen to 47.4% – an increase of 70% in three years. This is more than double the unemployment rate for young white people, which increased from 15% in 2008 to 20.8% in 2011. Unemployment among young black women, while still higher than any other ethnic group, is lower than the black male percentage, at 39.1%.

Data breaking down unemployment by ethnicity used to be routinely published alongside official unemployment figures, but has not been released since February 2011, apparently due to changes in how different ethnic groups are coded by official statisticians. However, the data is still collected as part of the official labour market survey, which is used to generate official unemployment figures, allowing this breakdown to be obtained.

On Monday Labour MP Diane Abbott highlighted some of these hidden statistics in a Guardian comment article revealing that the overall unemployment rate for black people had risen to 44%. This was criticised by Channel 4's factcheck blog which questioned the origin of the data and stressed that the rate did not include students. However, the Guardian has persuaded the ONS to release a detailed breakdown of the figures and found the rate for young black men is even higher than the overall figure used by Abbott.

Asked to respond, the Department for Work and Pensions stressed the overall proportion of young black people who are unemployed was only 22%. This differs because it includes students and others not available for work, whereas the ONS calculates the official unemployment rate as a percentage of the economically active population.

"We have introduced a number of measures designed to give all young people the right skills and experience to match them to vacancies," said a DWP spokesperson. "This includes the Work Programme, which assesses people as individuals to discover what barriers are preventing them from getting a job and will then work with them overcome these problems. We are also spending £1bn over the next three years to help young jobseekers by creating around half a million opportunities through work experience and apprenticeships."

Youth unemployment figures are always considerably higher than the general population. This is partly due to the difficulty of tracking students through this data. Most students are excluded from official figures, as they are classed as "economically inactive" – people who are not currently in work, or looking for work – though any student actively looking for full-time or part-time work but unable to find it would be classed as unemployed. It should be noted, however, that black people are less likely to enter higher education than most other ethnic groups.

The reaction among black youths on the streets of Toxteth, the Liverpool district that saw some of the worst inner-city riots of the Thatcher era, was one of frustration. "I've handed out over 50 CVs since January," said Joel O'Loughlan, 18. "Each day I go to the job centre and look online as well. I've had a two interviews but I didn't get either job. You don't even get a call back most of the time. It makes you feel … I don't know, like what's the point?" He added: "Being black definitely makes it harder. Sometimes if you're going to a job [the employers] look at you like you're not going to work here, they think you're not the right kind of person. That's across the board. I've been handing CVs out to coffee shops, shops, you name it. I need the money and will go to uni to do what I really want next year but right now it feels like more than bad luck."

Nathan Atiko, 24, said: "Sometimes I have in the back of my mind that employers see my surname, see it's African and write my CV off straight away. I think about changing it because I wonder if they immediately think I might be trouble or I might be lying." He added: "I can count on one hand the amount of interviews I've had. I've been to university, I know how to write a CV, do application forms, but my [white] friends from university are getting jobs and I'm not. I've looked at their CVs and it's exactly the same as mine yet they're getting the job."

Google's UK operation is among the companies that have taken a more pragmatic approach to the ethnic employment issue. It makes strong business sense for Google to run a mentoring scheme for black youths, according to the company's head of search advertising in northern and central Europe, Adrian Joseph. "We believe it makes good business sense. Our ambition is to make information universally accessible to all our users. If we don't reflect all of our users in the composition of our workforce, it will be much harder to achieve that," said Joseph. Google's mentoring programme is now in its second year and focuses on undergraduates and postgraduates with an interest in software engineering.

According to an organisation that advises the public and private sector on employing ethnic minorities, a mass of factors from inner-city schools to unwitting bias against graduates are behind the discrepancies in employment figures, with the confusion exacerbated by a lack of consensus and research on the underlying causes. Race For Opportunity, the diversity arm of the Business in the Community organisation, says the government and businesses should "get their heads together" to tackle the problem, while greater use of mentor figures from families and businesses could make a difference.

Sandra Kerr, Race for Opportunity's national director, said: "Why can't everybody have a mentor? There is a whole social mobility dimension that affects you whatever your ethnicity. There are work places that have skilled people who can help with monitoring, reading, being role models. Employers are looking for people who are ready for work and social mobility determines factors such as what school you go to, whether you will get the educational attainment to go to university."

Kerr added that some employers, including the Home Office and consultancy group Ernst & Young, are attempting to eliminate racial bias in graduate recruitment. "If you leave university and you are 'Bame' [black, asian and minority ethnic group], you are still more likely to be unemployed one year on," said Kerr, ascribing the problem to "that subtext of what you don't know". She added: "I think it's unconscious bias. Some employers are being really truthful about it already."

    Half of UK's young black males are unemployed, G, 10.3.2012,






Iran Halts Oil Exports to Britain and France


February 19, 2012
The New York Times


PARIS — Iran’s government on Sunday ordered a halt to oil exports to Britain and France, in what may be only an initial response to the European Union’s decision to cut off Iranian oil imports and freeze central bank assets beginning in July.

Britain and France depend little on Iranian oil, however, so their targeting may be a mostly symbolic act, a function of the strong positions the two nations have taken in trying to halt Iranian nuclear enrichment and to bring pressure to bear on Syria, one of Iran’s closest allies.

Iran may also be reluctant, when its economy has been damaged by existing sanctions, to deprive itself of revenues from its larger European customers. At the same time, it may be seeking to divide the 27-nation European Union between those who depend on Iranian oil and those who do not.

Sunday’s order, according to the Mehr News Agency in Tehran, came from the Iranian oil minister, Rostam Qassemi, who had warned this month that Iran would cut off oil exports to “hostile” European nations. On Sunday, the Oil Ministry spokesman, Ali Reza Nikzad-Rahbar, confirmed that shipments to Britain and France had been cut off, and said on the ministry Web site, “We have our own customers and have no problem to sell and export our crude oil to new customers.”

At the same time, according to the Mehr agency, an official at the Oil Ministry said Iran was seeking longer-term contracts of two to five years with other European nations.

There was no immediate reaction from French officials, and the British Foreign Office in London declined to comment. A British government official, demanding anonymity to describe internal discussions, said that “we’re not getting exercised about it,” noting that Iran provides “less than 1 percent of our imported crude oil.”

Jean-Louis Schilansky, president of the French Union of Petroleum Industries, told the French newspaper Le Monde that “the Iranian decision has no practical, direct consequences” for France, which since 2011 “practically stopped importing Iranian oil.”

Iran is deeply dependent for foreign currency from oil sales, which supply more than 50 percent of the national budget and account for 80 percent of exports. Iran produces about 3.5 million barrels a day and exports about 2.5 million, 70 percent of that to Asia.

The 27 nations of the European Union are a big customer as a whole, representing about 18 percent of Iran’s exports.

But Britain and Germany get only about 1 percent of their oil from Iran, and France gets only about 3 percent from there. Other European countries, like Greece, Italy and Spain, are much more reliant on Iranian oil. Greece, for instance, gets about one-third of its oil from Iran, while Italy and Spain each get about 13 percent, according to European Union figures.

Greece, Italy and Spain were more reluctant than Britain, France and Germany to vote for rapid oil and banking sanctions against Iran.

Britain, France and Germany are also the European nations negotiating with Iran on its nuclear program in the talks that also include the United States, Russia and China and are presided over by the European Union’s policy chief, Catherine Ashton.

France and Britain have pushed hard to increase sanctions against Iran to get it to stop nuclear enrichment in what many in the West believe to be an Iranian program to build a nuclear weapon. The sanctions are part of a dual-track strategy that combines pressure with negotiations. Germany, however, has explicitly opposed any military action against Iran, while Britain and France, like the United States and Israel, have refused to rule out military action.

Iran denies that its nuclear program has any military intent, but it has flouted repeated Security Council resolutions requiring it to stop nuclear enrichment and cooperate fully with the International Atomic Energy Agency. Merging conciliation with threat, Iran has recently boasted that it was about to start a vast new array of centrifuges to enrich uranium deep in a mountain that would be very difficult to bomb, while it has renewed its call for negotiations after a gap of a year.

French officials believe the threat of new sanctions and the bite of older ones, together with the travails of the Syrian government and the hints of military action coming from Israel, are bringing Iran back to the table. They are concerned, however, that the Iranian offer for talks is simply another way to buy time while the centrifuges continue to turn. They also fear that if the talks fail, a military strike on Iran may follow.

Last week, Iran sent a letter to Ms. Ashton calling for a new round of negotiations with the group of six, in response to a letter from her on Oct. 17. The Iranian letter, from the country’s nuclear negotiator, Saeed Jalili, declared Iran’s “readiness for dialogue” at “the earliest possibility.” The letter, which was vague but did not contain preconditions, was greeted by Ms. Ashton and Secretary of State Hillary Rodham Clinton with a mixture of optimism and skepticism.

French officials have said that Iran must agree to talks that center on the key issue: its nuclear program and the calls by the Security Council to stop it. The last round of talks ended a year ago when Mr. Jalili demanded that the United Nations first lift all sanctions and acknowledge Iran’s “right to enrich” uranium before talks could begin. The demands were unacceptable, and the six say that the Nuclear Nonproliferation Treaty contains no “right to enrich,” only the right to peaceful nuclear energy.

The French foreign minister, Alain Juppé, said last week that the European Union would carry out its sanctions with determination. “Iran continues to develop a military nuclear program, we are convinced,” he said Wednesday. “We say to Iran that the path for dialogue remains open, but if it’s not engaged, then the sanctions will be enforced with great firmness.”

Ravi Somaiya contributed reporting from London,

and Artin Afkhami from Boston.

    Iran Halts Oil Exports to Britain and France, NYT, 19.2.2012,






David Cameron: we are not immune from eurozone crisis

PM uses new year message to declare
Britain can only secure 'some protection' from the debt storms


Monday 2 January 2012
The Guardian
Nicholas Watt, chief political correspondent
This article appeared on p1 of the Main section section of the Guardian
on Monday 2 January 2012. It was published on guardian.co.uk at 00.05 GMT
on Monday 2 January 2012. It was last modified at 07.30 GMT
on Monday 2 January 2012.


David Cameron today serves notice that the economy faces another tough – and possibly worse – year as he admits that Britain may only win a temporary respite from the crisis in the eurozone.

As Angela Merkel and Nicolas Sarkozy warn of a bleak year ahead, the prime minister uses his new year message to declare that Britain can only secure "some protection" from the "debt storms".

The warning by the prime minister contrasts with a bold statement in his new year message last year in which he stated: "We have pulled Britain out of that danger zone."

Amid fears among ministers of a double-dip recession this year, Cameron says the government's deficit reduction plan has ensured the markets have not targeted Britain. But he takes the rare step of qualifying this claim, which has been at the heart of the government's defence of its decision to cut the deficit at a faster rate than Alistair Darling planned to.

In his message, filmed for the Downing Street website, Cameron says: "We've got clear and strong plans to bring down our deficit, which gives us some protection from the worst of the debt storms now battering the eurozone. We have gained security for now – and because of that, we must be bold, confident and decisive about building the future."

The prime minister, who faced criticism for initially relying on monetary policy and waiting 18 months before setting out a major growth plan in the autumn, admits more needs to be done for the economy. "I know much needs to change. We've got to do more too to bring our economy back to health. So we've set out big plans for the transformation of our infrastructure, starting now – with better roads and railways, superfast broadband and new homes."

Cameron will say he understands people's concerns about rising utility bills and the future of their jobs. "Of course I know that there will be many people watching this who are worried about what else the year might bring. There are fears about jobs and paying the bills. The search for work has become difficult, particularly for young people. And rising prices have hit household budgets. I get that. We are taking action on both fronts. I know how difficult it will be to get through this. But I also know that we will."

As Ed Miliband, the Labour leader, prepares to sharpen his attack on the Tories as the party of privilege, Cameron pledges to take action against excesses in the City. Ministers are expected, as Nick Clegg confirmed last month, to impose restrictions again on bonuses in the state-controlled banks. It is understood that the government may repeat the restrictions of last year, including a shrinking of the bonus pool at Royal Bank of Scotland and Lloyds. Bonuses to chief executives and executive directors were paid in deferred shares and there was a £2,000 limit on cash awards.

The prime minister says: "I will be bold about working to cure the problems of our society. While a few at the top get rewards that seem to have nothing to do with the risks they take or the effort they put in, many others are stuck on benefits, without hope or responsibility. So we will tackle excess in the City just as we're reforming welfare to make work pay and support families."

Cameron makes clear he will not allow the economic climate to stop him from pressing on with the reform of public services. In remarks which may upset teachers, medical staff and the police, he highlights weaknesses in three key public services. "I am determined to do the bold things it will take to sort out public services, too. Too often our schools aren't up to scratch, our hospitals aren't always clean enough and our police don't catch criminals. Brilliant and committed people work in public services – but somehow the system stops them doing their job. So we'll change it."

Cameron, who was influenced by Ronald Reagan's optimistic Morning in America campaign, starts his message on an upbeat note as he highlights "the global drama of the Olympics and the glory of the diamond jubilee". He says: "This will be the year Britain sees the world and the world sees Britain. It must be the year we go for it – the year the coalition government I lead does everything it takes to get our country up to strength."

He will explain his new year message during two days of visits around the UK at the end of this week.

He will return to work in the coming days in advance of the return of parliament next week.Cameron's warning came as Merkel said 2012 would "undoubtedly" be harder than 2011. Sarkozy said: "This unprecedented crisis, which is without doubt the worst since the second world war, is not over."

David Cameron: we are not immune from eurozone crisis, NYT, 2.1.2011,




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