On hearing that Britain is 'returning to growth', many if not most people will probably ask 'recovery? what recovery?' writes James Bloodworth.
On hearing that Britain is ‘returning to growth’, many if not most people will probably ask ‘recovery? what recovery?’ writes James Bloodworth
George Osborne was at the Dispatch Box in the House of Commons earlier today at a session of Treasury Questions. He looked and sounded very pleased with himself, no doubt due to the latest GDP figures which show that the economy grew by 0.8 per cent in the first quarter of 2014. This is the fifth successive increase and also the longest period of continuous expansion since the financial crash.
With the General Election just over a year away, the Tories will be looking at today’s GDP figures with barely concealed delight. They will point at what are now looking like much more than ‘green shoots’ and cite the improved economic outlook as evidence that their ‘economic plan is working’. Don’t let Labour ruin the recovery, they wil add.
But before the chancellor uncorks his bottle of champagne, he ought to reflect that for most people the ‘recovery’ is simply something they hear about on the television – it isn’t translating into more money in their pockets. Indeed, for many people it really is a struggle out there. Despite it being said repeatedly in the media that wages have “finally caught up with inflation”, when you exclude bonuses average wage growth remains below inflation at 1.4 per cent to 1.7 per cent.
The chancellor must also reflect on the three years it’s taken him to bring growth back to the British economy. Yes today’s GDP figures are strong, but they are the strongest economic figures since 2010 – when Labour was in office. That is hardly the thundering victory it is made out to be by the chancellor and his allies. The fact that GDP per head is still almost 7 per cent lower than its 2008 level is in part down to the fact that it’s taken the chancellor so to get to a point where we can even talk about a recovery.
It’s also a mistake to focus purely on GDP, as the press is apt to do. For most people GDP is simply a line on a graph. Of greater concern is the fact that wages have been falling in real terms for four successive years; and it will take more than a few quarters of growth for living standards to get back to pre-crisis levels.
Indeed, if you look beneath the surface of the ostensibly good GDP and unemployment figures it’s clear that for lots of people the recovery has not arrived yet. The strong levels of employment, so often cited by the government as proof that their economic plan is working, are in part based on a rise in self-employment and a jump in the number of people on insecure zero-hours contracts. Around 1 million people – 4 per cent of the workforce – are now on precarious zero-hour contracts, and almost half the 1.2m jobs created since the coalition came to power are also accounted for by self-employment.
More worryingly, the number of people using food banks has grown exponentially since the coalition came to power, with homelessness also on the rise – rough sleeping increased by 6 per cent in England and 13 per cent in London last year.
With house prices rising by a whopping 18 per cent in a year in London, what we’re witnessing is a tale of two recoveries: green shoots if you own a London property or work in banking, a trip to the food bank and a zero hours contract if you don’t.
I’m exagerating of course, but not a lot. On hearing that Britain is ‘returning to growth’ and that the ‘economic plan is working’, many if not most people will probably ask ‘recovery? what recovery?’.
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