A genuine recovery has to be built either on a rise in business investment (or of course public investment), a growth in productivity gains, or a sustained expansion of exports. UK business investment, having plummeted by a disastrous 25% at the 2008-9 crash, has still never recovered and as a percentage of GDP it is now 159th lowest in the world, just behind Mali, as I told the PM two days ago.

UK labour productivity has fallen drastically as employment, albeit at the lowest wages or on zero hours contracts, has increased significantly while at the same time output has flatlined; productivity cannot rise while wages, already 9% below their 2007 level, continue to fall. And exports, despite a 25% fall in the exchange rate since 2007, are still flat and will remain so while manufacturing remains hollowed out and the exchange rate is still not at a competitive level. So what has taken the strain in this much-hyped recovery? Yet again, personal debt, the one foundation that is anathema to sustained recovery. Continue reading →