LONDON BRIEFING:AS 2011 drew to a close, compilers at the Oxford English Dictionary unveiled their award for Word of the Year, sparking the usual controversy and complaints in the normally genteel world of lexicography.
They chose the phrase “squeezed middle” as the one that most summed up the past 12 months. In doing so they rejected a number of strong contenders, including Arab Spring, fracking, hacktivism, tiger mother and bunga bunga (a reference to Italian prime minister Silvio Berlusconi’s wild parties).
The phrase squeezed middle, originally coined by Labour leader Ed Miliband on the BBC Radio 4 Todayprogramme, has become shorthand for the plight of cash-strapped Britons as the government's austerity measures begin to bite.
The full dictionary definition reads: “Squeezed Middle: the section of society regarded as particularly affected by inflation, wage freezes and cuts in public spending during a time of economic difficulty, consisting principally of those on low or middle incomes.”
We can expect to hear much more of the plight of the squeezed middle in the year ahead, as the UK teeters on the brink of a return to recession, weighed down by chancellor George Osborne’s harsh austerity measures and the continuing crisis in the euro zone.
The only bright spot for people in the year ahead is that inflation, which reached a peak of more than 5 per cent in 2010, is set to fall, thus easing the pressure on household spending power – at least for those who keep their jobs, according to Tony Dolphin of the Institute for Public Policy Research.
“In the short term, economic policy has become a matter of hoping something turns up. And that is why, for the UK economy, next year is unlikely to be a happy one.
“As we enter 2012, it seems the word that best describes the outlook for the UK economy is ‘bleak’,” says Dolphin.
Should things take a serious turn for the worse in the euro zone then Britain risks plunging into a deep recession.
Britain has already lost its place as the world’s sixth largest economy to Brazil, according to the Centre for Economics and Business Research (CEBR), in a graphic demonstration of how the world economic map is changing.
The new league table, measured by gross domestic product, shows the shift of power from the credit-crunched west to the commodity-rich east, a trend that will accelerate over the coming years.
By 2020, the CEBR’s Doug McWilliams predicts Russia will have risen to fourth place, followed by India, then Brazil.
Britain will fall to eighth place, after Germany in seventh slot. As McWilliams says: “Brazil has beaten the European countries at soccer for a long time, but beating them at economics is a new phenomenon.”
There is one consolation for Britain – McWilliams predicts it will overtake France in economic terms by 2016, no doubt sparking another flurry of cross-Channel sniping between the two nations.
However, bright spots on the economic horizon will be hard to find in the year ahead. The impending Olympics and the Queen’s Diamond Jubilee may lift the nation’s spirits in the summer, but will they have a positive impact on the economy?
The billions spent constructing the now largely completed Olympics facilities has brought a boost to British construction firms and transformed a deprived part of London.
However, many companies in the capital fear the disruption to transport during the games will have a negative impact on their businesses, making it hard for deliveries to get through and disrupting employees on their way to work.
There are also concerns that the prospect of the games will encourage and deter tourists in equal numbers, leaving little overall boost to visitor figures. Absenteeism at this time could also be bad news for employers.
The games will have one definite positive impact on GDP, when the £300 million (€359 million) of ticket sales will be included in the public accounts for the third quarter.
That is equivalent to about 0.1 per cent of growth.
The Diamond Jubilee in June will be a winner with the austerity-stressed public, but economists are already fretting about the impact on Britain’s productivity in the second quarter as we all take an extra day off for the jubilee bank holiday.
But it is going to be a grim year and if something as simple as a street party can lift the nation’s mood, even if only for a weekend, then that is arguably a price worth paying.
Fiona Walsh writes for the
Guardian
newspaper in London
