There is NO evidence that Britain is recovering and we should say so

3:11 pm - July 26th 2013

by Sunny Hundal    

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The media narrative is that the economy is recovering and George Osborne’s stock is rising.

This has given Tories a spring in their step and made some in Labour jittery about what this means in political terms.

The politics of this are irrelevant because Britain is not recovering and Labour should not let the Conservatives get away with saying it. Here’s a brief explanation why.

1) Falling disposable incomes
As the Telegraph reported last month, ‘Recovery far off for families as disposable income sees biggest drop for 25 years’

The report points out that the next election is likely to be the first since 1931 when living standards are lower than at the last one.


2) Averages wages are falling and showing no signs of recovery
Inflation is rising faster than pay so real wages have fallen since crisis, and there is no sign of recovery there.


3) A flat GDP per capita
This graph by the Independent’s Ben Chu shows that while GDP as a whole may be rising slowly, the actual impact on households is virtually nil. The GDP per capita is flat


4) Investment into the UK is still in the doldrums
This chart is also by John Van Reenen at The Economist

The Conservatives are talk about a recovery for which there is no evidence whatsoever.

The only impact this will have is make them look more out of touch with people’s actual experiences. By the time the election comes around in two years time, hardly anyone will believe Britain is improving thanks to Osborne.

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments

The media and politicians. Oh dear.

Falling disposable income. This is all you need to know.

The latest wheeze is upto £12bn of taxpayer guarantees to inflate the already inflated housing market. Labour should ask why the banks stuffed with £375bn of quantative easing should need any taxpayer guarantee.

2. Luis Enrique

thing is, all of these things are likely to be helped by growing GDP. Or perhaps more strongly, none of these things will (or maybe, are likely to) improve unless GDP does.

Now, you’re right, one quarter of semi-respectable GDP growth doesn’t mean much and it is yet to feed through to what matters – wages and employment – nonetheless, calling a decent GDP number “no evidence whatsoever” of recovery is stretching things too far.

If it is sustained, then by the time the election comes around in two years time, hardly anyone will deny Britain is improving

Points 1, 2 & 3 are more or less the same point aren’t they? And as Luis says, they’re a lagging indicator that will improve if there is steady GDP growth.

Britain is not recovering YET. At least two more quarters of decent growth are needed before anyone starts popping the champagne. We’ve been here before in 2010 and 2011.

I agree with points 2 and 3. It’s a bit of a step too far to say there are no signs of a recovering when we seeing small, and constant, improvements in GDP. GDP isn’t the only measure of economic growth but it’s one of the more important ones. It would be weird for incomes to rise without the baseline of GDP increasing, as the previous commentators said it’s likely these factors will follow sustained growth. Average wages should lag behind.

None of this matters if you’re struggling, talk of GDP is rather academic and useless if you can’t afford a reasonable living standard. It’s this Labour should concentrate on rather than making a disingenuous claim that there is no evidence the economy is recovering because there quite simply is.

Labour need to stop falling into traps set up by the Conservatives.

Change of tack given the lack of a double dip I presume.

Compare this recent assessment of Britain’s economic prospects by Sir Jeremy Heywood, the Cabinet secretary:

Twenty years to fix economy

Britain is in a “20 year generational battle” to rebalance the economy and return the country to financial health, according to Britain’s most senior civil servant.

8. Potty Training


9. Potty Training


For diagnostics of the economy, try this from a recent issue of The Economist: On a wing a credit card

11. Potty Training

@ #1
Very Good

The answer is cos they is all? illegally operating bankrupt.

Any handing back of house keys (cos they are massively over-leveraged on mortgage rip-offs
(‘exponential interest’ take = longer the mortgage yrs + higher lending multiples)
immediaty busts them again cos it would suck out their cash balance after a few thousand hand back keys.
(Why Govt bods are insisting on higher deposits on hand in bank)

This is how they were/are hiding it (in conjunction with the corrupt City accountants who sign off their books each year.)
When they saw the end of the banking madness, just before it all imploded, they all went on a massive buying spree of foreign banks of countries with high population savings.

When the yearly ‘reckoning’ came they raided the foreign owned banks and stuck Billions into their own coffers a few weeks before the accounts were signed off (to be presented for inspection to whatever corrupt body was paid to look the other way)

They then shunted the cash back where it belonged abroad, with ‘squeeky clean’ balance sheets showing loads of (illusionary)liquidity to keep public trust!

Thanks to the Bankers on HPC who taught us that one!

For another assessment of the state of the British economy, try Sam Brittan in the FT on 28 June 2013:

Britain let down by its bean-counting politicians

Compare the success of different countries in emerging from the Great Recession.

The clear winner among the Group of Seven rich countries is Canada, where output is 5 per cent above the its previous peak. (But I will not go on about it lest it look as if I am trying to curry favour with Mark Carney, the retiring governor of the Bank of Canada, who takes over at the Bank of England next week).

Next in line is the US, where output is 3 per cent above its previous peak. This is not bad going for a country whose much maligned constitutional arrangements split responsibility for economic policy between the presidency, the Federal Reserve and two Houses of Congress – themselves often divided in their partisan allegiance. Well behind is Germany with just over 1 per cent.

We strike negative territory with France, where output is nearly 1 per cent below its previous peak; and then descend to the UK, where the shortfall is almost 4 per cent. Bottom of the class is Italy, with a fall of nearly 9 per cent. The well known structural problems of that country are confounded by its being locked into the euro, with the escape route of devaluation shut off.

13. Baton Rouge

See that last quarter there? That was your ten-year pinnacle in the usual business cycle that was. The general trend is towards global depression via a series of ten-year cycles that leave us increasingly worse off. Government’s have no impact on this.

Declining disposable income (individuals and govt), a bankrupt financial sector and enormous monopoly profits and profiteering are sucking the life out of the economy. It is the perfect storm.

14. paul barker

This is a good example of how extremists deal with situations where reality stubbornly fails to match their predictions – they deny that reality is real.
Hence climate-change denial, deficit denial or recovery denial.
The real danger sign is when you attract the tin foil brigade eg “potty t” & “baton r”.


Sour grapes do not make an article.

Word on the street (or in the offices) where business is done is much more optimistic than it was 6 months ago and some kind of mental corner has been turned.

I suppose you could always hope for bad news to help prolong the agony but you’d really have to look hard at your motives if you were to do so. Remember you can always continue with the politics of envy during a boom as well as a recession – so there’s no need to change the tune.

I suggest the situation would improve further if the government should throw it’s weight behind fracking, got fuel costs down and help businesses produce more cost-effectively. But I’m not a T-shirted woman who enjoys screaming at lorries and believes that activism is a state subsidised lifestyle that holds much currency.

I fear that you may be heading in a direction you have often shown you have little understanding of. However a few issues which arise from what you have said.

1) Falling disposable incomes

Yes, disposable incomes have dropped. Most of this is from various government policies, many of which are peddled by this site. The simple fact is that wages have not, and cannot, keep pace with inflation.

2) Averages wages are falling and showing no signs of recovery

Then why has this site supported QE? Why do you support rock bottom interest rates? Why do you support the economic policies of the Labour government which are inflation prone?

3) A flat GDP per capita

Yes, it called no economic growth. We don’t fix the integral structural problems, we won’t fix the economy and none of the parties have an answer to these issues. So why you push one party over another is a mystery.

4) Investment into the UK is still in the doldrums

Are you surprised? Why would they invest? This site also pushes many of the things that are stopping investment. Higher tax, more regulation, and less freedoms. So why would anyone invest? There is a saying, it goes something like “no **** Sherlock”

As has also been pointed out these things are largely remedied by an increase in GDP. Something it appears we are seeing the start of. Do I agree with the plan of this government, no. Is Labour’s better, hell no. Either way, there is some assemblance of growth which in the long run will fix the problems you point out.

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