When is a recovery not a recovery?

the operation was a success but the patient diedNo recovery worth its name is unsustainable. There are basically four elements which provide both the necessary and sufficient conditions for economic sustainability: business investment, wages, productivity, and exports. On all four counts the current evidence is decidedly negative. Business investment still remains 6.3% below its 2012 level. Wages growth at 0.8% still lags behind inflation at 2.2%. The Bank of England thought productivity (output per hour) would have increased by 10.4% by the second quarter of this year; in fact it has fallen by 1.2% over this period. Exports fell by 2.4% in the most recent quarter despite the major fall in the sterling exchange rate. The ‘recovery’ is built, not on the fundamentals for sustainability, but on consumer credit and rising house prices. It will not last. Continue reading

The 2008 crash was no blip, but a complete change in trajectory for the British economy

Real GDP per capitaRichard Murphy this morning draws attention to a quite startling graph comes from an academic paper by Prof Richard Jones of Sheffield University on the need to invest in innovation As Richard says, “what the graph shows is something anyone interested in political economy needs to understand: 2008 was not a blip; it was a complete change in trajectory for economic growth.”

The questions what we do about it and how we react to it are addressed in his paper by Professor Jones. Continue reading

What this Labour conference should be about

Labour conference 2009The prime issue at Conference this year won’t be the union link, which may well be resolved by negotiation, but rather what is Labour’s core message. It has got to be setting out the alternative to prolonged austerity which will promote real and sustainable growth (not the shallow and over-hyped version currently on offer), cut unemployment sharply, and lay the foundations for fundamental change in our economy to enable the British people to pay their way in the world and have the living standards they aspire to. But it also means going beyond tackling austerity by challenging and replacing Britain’s failed business model – neoliberal capitalism – which has been at the root of this country’s decades-long decline and repeated cycles of boom and bust. Continue reading

Did austerity lead to recovery? No, GDP was increased by government spending

AUSTERITYThe government and its supporters have been quick to claim that the most recent GDP data have. George Osborne says the argument in favour of austerity has been won some more excitable commentators have even talked of a boom

Usually, we would provide analysis of the GDP data after the publication of the national accounts, the third release in the cycle from the Office of National Statistics, which provides a detailed breakdown of the components on economic activity and the final revision to the data. Continue reading

Britain can increase investment by slashing military spending

Let Us Beat Our Swords into PloughsharesThe momentous decision by parliament on 29 August not to participate in a military attack on Syria raises important points both for the trends in British politics and for economic policy. The Socialist Economic Bulletin has repeatedly argued that there is no prospect of a Tory election victory in 2015. After the failure of Cameron’s military agenda the certainty of a Tory loss has become the possibility of an electoral rout. In politics, whoever sets the agenda wins and the Tory agenda has spectacularly unravelled.

There is too a direct economic impact from the vote and the potential for an indirect impact. Britain spends far more than comparable countries on warfare. Now that there is clearly a diminished appetite for foreign wars and adventures this should be addressed. Continue reading