by Bobby Gardiner Follow @BobbyGardiner
Amidst political rhetoric and buzz-words, a consensus seems to have emerged – the economy has recovered. Such a conclusion often aims to justify Tory austerity, fortify Cameron’s leadership and frame Britain’s limited political left as naïve in their anti-austerity standpoint. But, just as in 2010 when the UK’s largest three parties sold austerity as the only economic option, perhaps a consensus is again being created rather than proved.
In terms of raw GDP growth, the economy has now recovered from its crash. However, any amateur economist knows the immediate improvement to GDP as a measure for economic growth is per capita or per head. In these terms, the UK economy has yet to return to pre-2008 levels:
But the UK economy is recovering faster than other national economies, says Cameron. Without context, however, such a statement is hard to value, and is little more than a political smoke-screen. The World Bank uses GNI (GDP that also accounts for British foreigners abroad) per capita as an indicator of development. When comparing Britain to the US, France and Germany, you can see that the UK economy crashed harder than at least some other advanced economies. Its quick recovery, then, is worth less if it has more to do.
Past this, economic growth in itself does not necessarily mean anything to the vast majority of citizens; the basic principle of ‘trickle-down’, where the profit of growth moves down an economy’s hierarchical pyramid to benefit everyone, has been widely discredited recently. For a country where the wealth gap has been huge ever since Thatcher, raw GDP growth now seems even less of a useful measure of economic ‘recovery’.
Job creation is another huge part of the economic ‘success consensus’ – the unemployment rate has fallen sharply to only 5.7%, around where it was pre-crash, according to data from tradingeconomics.com. This is huge, and in some senses is more reflective of society as a whole than economic growth. But although the ‘unemployment rate’ has fallen, the long-term unemployment rate has fallen far less — from 2.7% in 2011 to 2.1% in January 2015. At the beginning of 2008, it was only 1.3%. The use of zero-hour contracts and an increase in service-based employment means that while fewer people are technically unemployed, prospective employees looking for more concrete, permanent positions are still in limbo.
The most controversial rebuttal of Osborne’s economic policies actually refutes their beneficial effects altogether: major economists have accused austerity of damaging the UK’s economic recovery rather than causing it. ‘The only interesting question is how much GDP has been lost as a result of austerity’, says Simon Wren-Lewis of Oxford University.
Others move to point out that national debt has massively increased, that more people than ever are using food banks, and that child poverty is increasing. The point is, economic recovery and living standards in general are both infinitely more complicated than mere GDP growth. When politicians talk of the economy, they refer to every citizen within it. Let’s not be silly enough to accept one measure as all-encapsulating.
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Bobby Gardiner is an aspiring writer and student at Durham University. Very much still learning his trade, he publishes original writing, political commentary and more general pieces on his personal blog (www.bobbygardiner.me). Find him on Twitter: @BobbyGardiner.
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