28th August 2013
Britain is facing a lost decade of economic stagnation given its present growth rate warns union giant the TUC writes Philip Scott.
According to the union, the UK’s growing population has been supporting growth over recent years but it has cautioned that GDP income per head – economic growth that takes account of population change – is still lower today than before the coalition took office.
Its analysis found that GDP per head is now £23,728, just 0.7 per cent higher than the lowest point of the recession in 2009 and only 0.7 per cent lower than in 2010. But given that the annual population growth is 0.8 per cent, it will not return to its pre-recession peak level of GDP per head of £25,652, until early 2018.
The analysis of GDP per head follows recent research which showed that rising consumer spending is being driven by a sharp drop in household saving, rather than rising incomes. The TUC asserted that unless real wages and household incomes start rising again soon, the economy risks creating another personal debt bubble of the sort that helped cause the recent financial crash.
TUC general secretary Frances O’Grady says: “After years of recession and stagnation, prolonged by painful austerity, the government has been quick to claim we are back in recovery.
“But if the economy continues to grow at its current rate it will still take nearly five more years to get back to where we were in 2007. That does not sound like much of a recovery.
“The basis for recent economic green shoots is not encouraging either. Too many people are having to run down their savings or turn to credit cards to spend in the shops, rather than see their incomes grow. And behind improving employment figures are millions of workers whose incomes are falling and who cannot get enough hours to make ends meet.
‘We all want to see the UK economy back on track but any talk of recovery is meaningless unless we get the right kind of growth.”