David Cameron boasted last week of ending Britain’s double dip recession. But behind the fanfare, the facts are as grim as ever.
The Tory prime minister was quick—indeed, a day early—to seize on figures showing the economy expanded by 1 percent in the three months to August.
That means that by looking at gross domestic product (GDP), a formal measure of economic output, Britain is out of recession.
But the good news is more than a little shallow. All of the money spent on Olympics tickets was counted, regardless of when it was spent. According to the Office of National Statistics, that added 0.2 percent to growth.
And half of the 1 percent growth simply came from the fact of having one fewer bank holiday than the previous quarter now that the queen’s jubillee is out of the way. The remaining 0.3 percent came from banking, finance, hotels and restaurants.
As the figures came out Ford culled 1,400 jobs. This gave a more accurate picture of the economy. Manufacturing is still falling. Construction output is down 10.8 percent in the last year.
Tory chancellor George Osborne insisted, “This government is laying the foundations for lasting prosperity.” In reality the recovery has been weaker than in any recession—including the 1930s.
Over the past 12 months, overall output has been flat and remains 3 percent lower than before the crash. GDP per person is down 7 percent from 2008. There has been no improvement for three years.
A better measure of living standards is national income per head. That’s down by over 13 percent since 2008 and is still falling. Workers are on average £1,600 worse off each year than three years ago. That will reach £8,500 by 2020.
The government’s Office for Budget Responsibility said this fall in real income was due to “stubborn inflation hitting consumption and export markets hitting net trade”, and the “possibility that fiscal consolidation hit growth harder than thought”.
Translated, that means price rises wiped out the apparent small income increase. Exports didn’t go up as predicted and cuts made things worse.
It’s true that unemployment isn’t as high as some previous recessions—though 2.5 million unemployed isn’t exactly low. The reason is that bosses have cut wage costs either by actual pay cuts or by reducing the number of hours.
The first phase of the recession from 2008 saw a fast rise in unemployment. Some of the people who lost full-time jobs have found their way back but are working fewer hours in part-time jobs.
For those workers in full time employment, the squeeze has come through pay. Average hourly earnings have fallen by almost 8 percent in real terms since the recession began. Total hours worked remain 1.3 percent below 2008 levels.
And what new jobs do exist are mainly for skilled people above 50 years old. Unemployment for 18-24 year olds is still going up.
For those out of work it is getting harder to get back to work. Some 600,000 unemployed people have been out of work for over 12 months. And for every vacancy there are 13 job applicants.
The government has relied on export growth and printing money for the banks to get the economy going. That hasn’t worked.
And with no sign of the crisis ending soon, the Tories and the bosses are as determined as ever to make us foot the bill. The only real good news will come from workers fighting back.