Workers have been feeling the pinch for
some time, even before the slump of 2008-09. Now they are in for an even worse
time, the most prolonged squeeze on living standards in recent memory.
Workers have been feeling the pinch for
some time, even before the slump of 2008-09. Now they are in for an even worse
time, the most prolonged squeeze on living standards in recent memory.
Official figures analysed by the Financial
Times today show that the British economy is set to experience the slowest
pick-up in consumer spending of any post-recession period since 1830.
Today, as people pull in their belts,
consumer spending is 4% below the post recession peak. According to figures
from the Office for Budget Responsibility, this will recover in the next four
years. But this will be the weakest “recovery” of any of the 18 recessions over
the last 180 years, even worse than in the Great Depression.
However, even these estimates from the Bank
and the OBR are considered over optimistic because they assume rising household
debt when people are already overextended.
According to the Bank of England, which has
data going back to 1830, when records began, this period of austerity will be
“exceptional”.
Given the fact that consumer spending and
public spending account for more than 85% of the British economy, and will face
massive cuts, the hope is that the fall will be off set by business investment
and exports. But this is a
pipe-dream. With manufacturing production still 8% down on its pre-2008 peak,
there is little hope this will forge ahead.
Working people had better watch out. “The recovery”, according to Simon
Kirby of the National Institute for Economic and Social Research, “is going to
be particularly awful.”
