Tory chancellor George Osborne claims “Britain is coming back”.
The economy has grown for five consecutive quarters in terms of GDP, the most common measure of output. It looks set to finally surpass pre-crisis levels this year—the big and important services sector already has.
Even harder-hit sectors that went through a triple dip recession are showing signs of recovery, with mini-booms in car manufacturing and construction.
A survey by the bosses’ CBI found that optimism among business leaders is growing faster than at any time since 1973. That was the year of the crash that marked the beginning of the end of the post-war boom.
Britain is clearly no longer in the depths of recession—even if our living standards continue to stagnate or get worse. But so far the recovery is limited, uneven and fragile.
The housing bubble in London and the south east could burst—probably not enough to make it an affordable place to live, but enough to threaten the construction boom.
That raises the spectre of the mortgage runs that began the last crash.
Car sales are currently going up. But with a surplus of cars on Britain’s roads and in garages, this will be hard for bosses to sustain.
The increase in consumer spending that the recovery relies on takes place during a cost of living crisis.
This has required a new growth of household debts, particularly unsecured ones. The key factor in driving the economic crisis is the rate of profit, which determines whether bosses will invest. It continues to stagnate, as it has since the crash.
The cycle of recession and recovery is integral to capitalism. The destruction caused by a crash can lower costs, eliminate competitors and allow the bosses to make higher rates of profit again.
It is also a whip bosses use to make workers produce more for less. One way is to cut workers’ hours and expect them to deliver the same amount, or to demand more work is done outside of normal work time.
The average worker works 50 hours a year less now than before the crisis. Attacks on hours and conditions are making working life more stressful.
But British capitalism has a long term problem with productivity that it will take more than viciousness to solve.
Whether measured in terms of output per worker or per hour worked, productivity remains significantly lower than in other advanced economies.
Shifting this informs ruling class debates around education, energy and transport—things that austerity may even have made harder to reshape.
There have been small increases in investment. The Guardian newspaper even hailed a survey of big companies’ investment plans by accountants Deloitte as showing an “investment boom”.
But they do little to reverse a long term trend of investment falling. Recovery or not, British firms are still sitting on vast reserves of cash or boosting payouts to shareholders instead of spending on new production.
Everything is up - except our pay
bosses are determined not to share the fruits of any recovery with workers.
And in current debates about interest rates, Bank of England officials emphasise that they don’t want to let pay rise too quickly.
It was widely reported that wages are finally beating inflation. The average pay increase was 1.7 percent in the last year—just above the 1.6 percent rate of inflation by the government’s preferred CPI measure.
But the RPI measure of inflation stands at 2.6 percent. And the figure for pay includes bonuses and the salaries of bosses.
Take bonuses out and the rise was just 1.4 percent—falling to 0.9 percent in the public sector.
The true cost of cuts to welfare and services will keep going up for years, as people left with close to nothing become increasingly desperate and isolated.
The Institute for Fiscal Studies projects that another 3.7 million people will sink into absolute poverty by 2020.
Are there too many people?
It’s not just the economy that’s growing, but the population. That’s one argument put forward for why we aren’t feeling the recovery—that total economic output is going up, but not output per person.
And with the majority of recent population growth down to immigration, it’s an argument that’s a boon to racists who want to scapegoat migrants.
But it’s not population growth that is unusually fast, but economic growth that is unusually slow—something that’s nothing to do with immigration.
Net immigration has been falling more or less steadily since its peak in 2004, when Britain’s economy was still booming. This took a while to translate into slower population growth, since immigrants tend to be young adults of the age group most likely to start families.
But now even the baby boom that followed seems to be running out of steam.
There are not enough jobs
Unemployment has reached its lowest level since 2009. But there are still 2.2 million people out of work—including one in five young people.
In the north east of England unemployment was still climbing during the winter, and now stands at more than 10 percent.
Is there a global slowdown?
When the crisis hit in countries such as Britain, many economists hoped that growth in countries such as China and Brazil could keep the world economy going.
But now estimates of global recovery keep getting revised downwards as the “emerging markets” slow down.
This will make it harder to find markets to export to—and Britain still imports far more than it exports.
How many workers?
A recent survey of bosses by the Office for National Statistics (ONS) recently estimated that 1.4 million people are on zero hours contracts.
That’s three times the number found in a previous survey of workers.
But if true the figure represents fewer than 5 percent of workers in Britain.