Should be an interesting week!

The OECD's latest forecast for the UK economy, released today, shows the economy returning to mild recession in early 2012. The Bank of England sounded an equally gloomy note in its most recent update, and the government's arms-length forecasting unit, the OBR, will doubtless do the same when it publishes its latest update this week, to coincide with the Autumn (formerly Pre-budget) Statement.

The excellent Chris Dillow wrote an interesting piece on his blog recently about why politicians are always so anxious to keep the economy expanding. One of the reasons he gave was that rising GDP makes it easier to meet more of the competing demands of various segments of the population. When GDP isn't rising, or worse, when it's actually falling, politicians face unpleasant choices about which demands get met, and those who are passed over tend to get nasty.

Chris Dillow's analysis, together with the OECD's downbeat forecast, offers a useful framework for looking at the two big events in the UK this week: Chancellor George Osborne's Autumn Statement tomorrow -- in truth, a budget in everything but name -- and the mass walkout of public sector unions on Wednesday, in protest against planned changes to their retirement pensions.

The old British tradition of budget secrecy is long gone. There have been so many pre-announcements and heavy hints that there are likely to be few big surprises in Osborne's statement. There will be some focus on getting the economy moving, via a plan to boost bank lending to medium-sized businesses and a fresh commitment to infrastructure spending, though it's not clear how much of this will be truly new. There will also be a sop to the "squeezed middle", with a planned increase in fuel duties scheduled for early 2012 to be scrapped, and rail fare increases capped. Remarkably, it's likely that this will be paid for by scaling back the inflation adjustment of social benefits that normally takes place each April -- though there's every possibility that payments to the elderly will be exempt from this.

Notice any common theme here? The "squeezed middle"; cash-strapped entrepreneurs; the elderly. Tory voters all. It looks as if Osborne's response to the prospect of a shrinking GDP pie is to ensure that his natural constituency continues to get its share.

The public sector unions seem to be thinking on the same lines. They have been unable to prevent significant job losses over the past year, with the prospect of more to come. However, the likely scale of Wednesday's strike -- a walkout of more than two million people, the biggest since the General Strike of 1926 -- indicates that they are not prepared to give up one of their most prized possessions, the so-called "gold plated" pensions of their members, without a fight. The (largely true) argument that these pensions will be paid for by taxpayers who themselves enjoy much less generous pension schemes is simply brushed off by the union leaders. If the pie is shrinking, they intend to fight to hold onto their members' share.

Not much "Big Society" thinking here, either by Osborne of the unions, is there? Mind you, it has been some time since that vacuous term had much of an airing. More on all of this as the week progresses.