The economies of the European Union and the Euro Area both contracted in the 1st quarter of 2013. The renewed contraction in GDP began in mid-2011 and has now run for 18 months on both cases. But, as Chart 1 (above) shows, the recovery from the depths of the recession in both cases was short-lived and at no point was the previous peak in activity of the 1st quarter of 2008 recovered. In reality, the European economy has been in a slump which stretches all the way back to the beginning of 2008 and is now entering its sixth consecutive year. Continue reading
Tagged with Recession
Britain’s output per (available) worker is back to 2003 levels
This week, we have learnt from the Office for National Statistics that 2.5 million were still unemployed in the last quarter of 2012. The UK economy is failing to use the skills and resources of our people to best effect in the common interest. This is to a large extent because the government’s economic policies are wrong.
With 2.5 million still unemployed, the problem is that we have a shrinking economy, largely because we have failed as a nation to invest in our future, and are trapped in the downward spiral of austerity and lack of vision. We still have perverse economists who argue, in the teeth of the evidence, that the public sector is ‘crowding out’ the private sector – and this at a time of high levels of private sector debt and mass unemployment! Continue reading
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Britain needs a pay rise to kickstart growth
On the day when Ed Miliband put the prime minister under severe pressure about declining living standards, newly published figures show that, since the onset of recession in 2008, the real value of wages has fallen by 7%, or more than £50 billion a year. In the same period there’s been a real drop in consumer demand of 5%. So says a report, Britain needs a pay rise, published by civil service union PCS, which argues this fall in the value of pay could be a major obstacle to the return of economic growth. Continue reading
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Does anybody know where the long-term growth is to come from?
If the 1% growth in the third quarter is a blip (caused by a once-in-a-lifetime Olympics surge plus a catch-up on deferred production from the previous quarter), where is genuinely sustainable growth going to come from?
This is a much more worrying question than whether the double-dip has really ended. The usual sustainable growth drivers are population increase and rising incomes, development of new markets, and innovation and productivity increases. None of these apply today. Continue reading
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‘The worst of recession is over’? That will come back to haunt Cameron
Where did we hear it before? ‘I detect the green shoots of growth’ (Norman Lamont as the economy plunged again) and ‘We’ve ended boom and bust’ (Gordon Brown just before the biggest financial crash for a century).
Equally Cameron’s ‘worst of the recession is over’ is a foolish hostage to fortune which he will come to regret. Clearly the worst of the recession is far from over, but we have been festooned with an all-out PR blitz to convince us that it is.
What it really exposes is how utterly desperate Cameron is to escape the impression (and the political consequences) of endless austerity whilst at the same time tightening the screw to make sure it bites even deeper.
