LONDON // Some people say that recession is just a word - but in Britain there are fears that it could become a habit. And a dangerous one at that.
It is possible that official figures for first-quarter economic growth, due to be released today, could put the country back in recession, and tension is building.
Although the average prediction from economists is for growth of 0.1 per cent on the quarter, they have warned that it would take the smallest statistical variation to shift the figure into negative territory. That would place the country in recession, which is technically defined as two consecutive quarters of economic contraction.
Another recession - the third since the 2008 financial crisis - is already being referred to with foreboding in the media as a "triple dip". Experts warned that it would create a wave of negative media attention that would scare consumers away from spending, feeding into a vicious cycle that has the economy flat-lining.
"It's psychological - this is all psychological," said Cary Cooper, a professor at Lancaster University Management School. "It's about the message that those figures send to consumers and small businesses."
The government desperately wants a strong growth figure to justify its increasingly criticised policy of painful spending cuts.
But recent indicators on Britain's economy, the third-largest in the 27-country EU after Germany and France, have been disappointing.
Inflation is rising, cutting into standards of living. Unemployment is up. Two international ratings agencies have downgraded the country's credit grade from the top level AAA, warning about the government's fiscal policies.
The government, which has long played on its AAA rating as a sign of its economic might, has been pursuing a harsh programme of spending cuts and tax increases to reduce the budget deficit which, at 7.4 per cent of annual economic output, is more than twice the EU's 3 per cent limit.
Like many governments across Europe that have been scarred by the bond-market turmoil that forced Greece and four other countries to seek, rescue loans, Britain's ruling coalition is focusing on cutting debt quickly, even at the cost of short-term economic pain.
What some governments and economists are slowly realising, however, is that they may have underestimated the extent of the damage such austerity would do.
There's long been pressure domestically in Britain to ease off the budget cuts, but in the past few days the International Monetary Fund has also chimed in.
The IMF, which is involved in all of Europe's sovereign bailout programmes, has put pressure on the UK's treasury chief, George Osborne, to slow down the austerity measures in hopes of reviving the economy.
As the debate rages on, even the head of the Church of England - the Archbishop of Canterbury, Justin Welby - has waded in and used a word no one wants to hear: depression.
Archbishop Welby previously served as an oil industry executive and now sits on the parliamentary banking standards committee.
He told an audience at the heart of government in Westminster on Monday that there was an issue of confidence and trust - and there is a need to rebuild both.
"I would argue that what we are in at the moment is not a recession, but essentially some kind of depression and it therefore takes something very, very major to get out of it in the same way as it took something major for us to get into it," he said.
The Bank of England has cut interest rates to record lows and pumped money into the financial system in the hope that this would encourage banks to lend money more cheaply. But the results have been mixed and experts say there is only so much a central bank can do to create jobs.
Even if the economy dodges recession today, the daily reality for many Britons remains tough.
The Trussell Trust, a network of food banks, said it fed more than 350,000 people in the year ending in March - more than double the 128,000 it had helped during the previous 12 months.
Tim Boyce, a retired investment banker who runs a south London branch, said he was seeing the people behind those numbers.
Inside a frosty church that has opened its doors to the desperate, he watches as they come for emergency handouts of rice, pasta and beans.
"Most people don't realise the extent of poverty," he said. "It's hiding in plain view."
Take Kevin Bishenden, 50, and his wife, Nicola, 40. He's an upholsterer who says that no one wants to hire someone his age. She says she just can't find work. The only reason they aren't homeless is that Britain's welfare state manages to keep a roof over their heads.
But they've slowly been selling all their possessions, together with memories of a past life. First a bike, then kitchen items. All the DVDs are going. They've already sold their wedding rings.
He lamented an additional council tax payment of £15 that came into effect as part of the government's austerity plans. His exhaustion was clear as he tried to imagine how they might pay it.
"Where's that supposed to come from?" he asked.
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The biog
Name: Younis Al Balooshi
Nationality: Emirati
Education: Doctorate degree in forensic medicine at the University of Bonn
Hobbies: Drawing and reading books about graphic design
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Stree
Producer: Maddock Films, Jio Movies
Director: Amar Kaushik
Cast: Rajkummar Rao, Shraddha Kapoor, Pankaj Tripathi, Aparshakti Khurana, Abhishek Banerjee
Rating: 3.5
JERSEY INFO
Red Jersey
General Classification: worn daily, starting from Stage 2, by the leader of the General Classification by time.
Green Jersey
Points Classification: worn daily, starting from Stage 2, by the fastest sprinter, who has obtained the best positions in each stage and intermediate sprints.
White Jersey
Young Rider Classification: worn daily, starting from Stage 2, by the best young rider born after January 1, 1995 in the overall classification by time (U25).
Black Jersey
Intermediate Sprint Classification: worn daily, starting from Stage 2, by the rider who has gained the most Intermediate Sprint Points.
How much sugar is in chocolate Easter eggs?
- The 169g Crunchie egg has 15.9g of sugar per 25g serving, working out at around 107g of sugar per egg
- The 190g Maltesers Teasers egg contains 58g of sugar per 100g for the egg and 19.6g of sugar in each of the two Teasers bars that come with it
- The 188g Smarties egg has 113g of sugar per egg and 22.8g in the tube of Smarties it contains
- The Milky Bar white chocolate Egg Hunt Pack contains eight eggs at 7.7g of sugar per egg
- The Cadbury Creme Egg contains 26g of sugar per 40g egg
India squads
Test squad against Afghanistan: Rahane (c), Dhawan, Vijay, Rahul, Pujara, Karun, Saha, Ashwin, Jadeja, Kuldeep, Umesh, Shami, Pandya, Ishant, Thakur.
T20 squad against Ireland and England: Kohli (c), Dhawan, Rohit, Rahul, Raina, Pandey, Dhoni, Karthik, Chahal, Kuldeep, Sundar, Bhuvneshwar, Bumrah, Pandya, Kaul, Umesh.
ODI squad against England: Kohli (c), Dhawan, Rohit, Rahul, Shreyas, Rayudu, Dhoni, Karthik, Chahal, Kuldeep, Sundar, Bhuvneshwar, Bumrah, Pandya, Kaul, Umesh
UAE currency: the story behind the money in your pockets
Sun jukebox
Rufus Thomas, Bear Cat (The Answer to Hound Dog) (1953)
This rip-off of Leiber/Stoller’s early rock stomper brought a lawsuit against Phillips and necessitated Presley’s premature sale to RCA.
Elvis Presley, Mystery Train (1955)
The B-side of Presley’s final single for Sun bops with a drummer-less groove.
Johnny Cash and the Tennessee Two, Folsom Prison Blues (1955)
Originally recorded for Sun, Cash’s signature tune was performed for inmates of the titular prison 13 years later.
Carl Perkins, Blue Suede Shoes (1956)
Within a month of Sun’s February release Elvis had his version out on RCA.
Roy Orbison, Ooby Dooby (1956)
An essential piece of irreverent juvenilia from Orbison.
Jerry Lee Lewis, Great Balls of Fire (1957)
Lee’s trademark anthem is one of the era’s best-remembered – and best-selling – songs.
Fixtures
Friday Leganes v Alaves, 10.15pm; Valencia v Las Palmas, 12.15am
Saturday Celta Vigo v Real Sociedad, 8.15pm; Girona v Atletico Madrid, 10.15pm; Sevilla v Espanyol, 12.15am
Sunday Athletic Bilbao v Getafe, 8.15am; Barcelona v Real Betis, 10.15pm; Deportivo v Real Madrid, 12.15am
Monday Levante v Villarreal, 10.15pm; Malaga v Eibar, midnight
The specs: 2019 Subaru Forester
Price, base: Dh105,900 (Premium); Dh115,900 (Sport)
Engine: 2.5-litre four-cylinder
Transmission: Continuously variable transmission
Power: 182hp @ 5,800rpm
Torque: 239Nm @ 4,400rpm
Fuel economy, combined: 8.1L / 100km (estimated)
The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
