The UK has been living through the most feeble and protracted economic recovery in modern British history, leaving people on course to be almost £9,000 worse off on average by 2022-23 relative to the pre-crisis trend, according to calculations by the Institute for Fiscal Studies.
It has long been noted that the UK’s recovery from that slump has been the slowest since the Great Depression in the 1930s. But, analysing historic data on UK GDP per capita, the IFS showed on Wednesday that it has been weaker even than what followed the agonising slump of the early 1920s.
The UK has avoided the mass unemployment that scarred the 1920s and indeed employment has grown strongly since 2010, but the chronic weakness of UK GDP and productivity growth since 2008 is the reason why average real wages are still below where they were a decade ago – and are not set to return to their peak until well into the next decade.
The IFS also produced calculations showing that if the pre-crisis trend of GDP per capita growth had continued national income per person would today be £5,900 higher this year. By 2022-23, on current official projections, the financial hit per person will grow to £8,600.
The IFS also produced calculations showing that if the pre-crisis trend of GDP per capita growth had continued national income per person would today be £5,900 higher this year.
“Dismal productivity growth, dismal earnings growth and dismal economic growth are not just part of the history of the last decade, they appear to be the new normal,” said Mr Johnson, the IFS’s director.
Conservative MPs have been lobbying for public spending increases, after eight years of cuts, but the IFS calculated that in order to meet their party’s own target of balancing the overall budget by 2025 would require an additional £18bn of spending cuts or tax rises.
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