The economy: green shoots for whom?
Conference season is only just beginning but already the terms of political trade are set. Starting with George Osborne’s speech on Monday, the coalition parties will hail a gathering economic recovery, naturally claim it is a result of their policies and bash the opposition for, well, opposing them. Going by recent form, Labour will snap back about “three wasted years” and how Britons’ living standards are still caught in a vice between negligible pay rises and stubborn inflation. And so the positions are staked out for the next few months: David Cameron claiming to have coaxed out the green shoots – despite the euro crisis and wobbly emerging markets – and Ed Miliband asking voters the question once used to devastating effect by Ronald Reagan: “Are you better off now than you were four years ago?”
If this really is the political game, neither side will score a convincing win. Labour’s position holds the most obvious risks: it will take subtle speech-writing and iron discipline in television interviews for Ed Balls and Mr Miliband not to sound either defensive about their own criticisms of austerity, or mealy-mouthed about the modest recovery Britain is at last enjoying. But the Conservatives and the Lib Dems also face the danger of sounding triumphalist about the economy’s current performance. Yet beyond any of the parties, there is a bigger problem facing the political class as a whole: it is not much of an exaggeration to say that all the main Westminster parties have been so resolutely focused on talking about the national, aggregate picture that they are ill-placed to discuss a recovery that feels very different – even non-existent – depending on where in the country you are living. Given the run of strong economic data and business surveys since this spring, it is surely obvious that the economy has moved decisively from crisis to slump to some kind of recovery. The key question to ask is what kind of recovery this is, and who is really gaining from it.
As our reporting on Monday will highlight, this is a recovery in which property prices are again racing away in London and the south-east – yet falling across the north of England. Anecdotally, there is plenty of evidence that employers in the capital are struggling to hire suitable staff, even while wages in the north-west are still falling. What this points to is an economy that is growing more divided in the aftermath of the crash and more dependent on credit and a mini-boom in property prices. It is also reliant on workers in many parts of Britain seeing their take-home pay and their top-up benefits drop year after year. While unemployment did not pick up dramatically after the crash (thanks in large part to the economic intervention of government and central bank), four out of five of new jobs are in low-paid sectors. It is a credit to the TUC, holding its conference this week, that much of the more nuanced economic critique has come from its researchers.
However much Mr Osborne may try to take the credit for the recovery, it must be pointed out that this is not the one he had in mind. His great rationale for making historic cuts was that the private sector was being “crowded out” by the public sector. Were the state simply to be hacked back, private enterprise would come roaring into the fray. That hasn’t happened. According to initial estimates from the Office for Budget Responsibility, Britain should by now be well into an almost unprecedented boom in business investment. Instead, the UK remains the place where business owners are on semi-permanent investment strike.
Aided by the plunging pound, the UK should be enjoying a huge rise in exports. Not so. Instead, the economy’s growth is reliant once again on consumers taking on more debt (dangerous, if interest rates ever get off rock-bottom) and snapping up property. The coalition’s much-touted manufacturing renaissance is so far confined to a roundabout of hi-tech firms in east London, and British industry remains largely a bit-player, making and assembling parts for foreign companies. It will take a lot more than this for Mr Cameron to claim a success story come 2015.
Fonte: theguardian.com
