The Recession is Over - For some!

The UK economy has returned to its pre-recession peak from 2008. In other words, the economy is producing more than it has ever produced before. On an annual basis gross domestic product (GDP) expanded by 3.1%. The economy is now worth 0.2% more than it was at its peak in 2008. So why aren’t you celebrating?

Since 2008, the population has grown by more than 2.5 million. More workers should mean increased output. Yet while there are 180,000 more people in work than when the recession began, output is only now a fraction above its pre-recession starting point. And there is an increase of nearly 750,000 people who are economically inactive; that is unemployed, discouraged from work, retired early and so on.  More than 1.1 million new jobs have been created over the past six years, despite the weakness of the wider economy. Yet around two thirds of these have been self-employed positions. Some economists suspect they could be disguised unemployment. Official survey evidence certainly suggests considerable underemployment in the economy, with people saying they wish to work more hours than they currently have.

That means that while GDP has returned to its pre-crisis level, GDP per head and GDP per worker are still well below that level, which means that productivity is also down.

 The policies of austerity has been tax cuts and subsidies for big firms and the rich, but pay cuts, pension cuts and reduced social security for workers and the poor resulting in the fall in real wages of about 9% in average earnings since 2008, adjusted for inflation. The income of the median household (that's the household for which half of households have a higher income and half have a lower one) has fallen by about £20 per week, after adjusting for inflation, since 2008.

The household at the 90th percentile (that's the one for which only 10% of households have a higher income) has seen its income fall by about £60 a week. At the other end of the spectrum, the household at the 10th percentile has seen a £2 per week increase.

 If this is a recovery someone else  got the money. The austerity policy is making a minority much better off: primarily landlords, bankers, the energy companies, the rail franchisees and so on. This is at the expense of workers and the poor. All the talk of recovery sounds hollow to the majority of the population.

Manufacturing is still more than 7% smaller, and the production industries as a whole have been diminished by 11%. Over 100,000 estate agent and related new jobs have been created under the coalition, more than double the combined total for new manufacturing and construction jobs created over the same period.  Industrial production is back to levels first since in the beginning of 1988.