Post-Crisis Britain and Economic Recovery

 

The Resolution Foundation forecasts that an improvement in economic performance is imminent. However, it also predicts that any future growth will come at the expense of a sharper than expected decline in living standards for low- to middle-income families.  In real terms average weekly earnings peaked at £493 and then fell back to just over £450 in mid-2014.  Although weekly earnings have since risen to just over £460, there remains a gap of £29 per week below the peak after six years of so-called economic recovery. (Resolution Foundation Report, Feb 2016 p.12) Not much of a recovery then, for those on average incomes.

The Resolution Foundation is a non-partisan, independent think tank. It has published a report on the state of the nation’s living standards each year for the last seven years. The most recent report shows that since 2010 there has been a “six year pay squeeze that pushed average wages back to their 2003 level”. (RFR p.3.)

The Report goes on to forecast “slight reductions in income for the poorest 25 per cent of households between 2015 and 2020” (p.6) The report states clearly, “This pattern is likely to entirely reverse the gains made on inequality in the post-crisis period.”  (p.6) We can interpret this to mean that what little progress has been made will be wiped out by government policy over the next five years. What else needs to be said about “we are all in it together”?

This is the hard data that Iain Duncan Smith would have been fully aware of prior to his resignation last week. IDS resigned on the grounds that in this context further cuts to welfare payments are indefensible. That seems reasonable. It might even seem that a government that does nothing to adjust policy in the light of this forecast, and yet sticks to repeating the maxim “we are all in this together” is guilty of fraud against the ‘hard-working families’ it claims to be on the side of. Perhaps IDS felt he had to resign to avoid a jail sentence.

 

 

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