The UK growth rate was disappointing again in the first quarter. Part of that results from the bad January weather. There might be some upwards revision when they get the final figures in, but it is not going to be a great performance. The UK went into recession early, came out late, and is still limping along.
Why are so many people surprised by this? We have a very lopsided economy, thanks to the strategy to print money for the public sector and squeeze the private sector. Allowing the pound to slide has left us exposed to imported inflation. As predicted here, the squeeze on living standards in now intensifying. Wages in the private sector are only going up by around 1% a year, whereas prices are rising by more than 4% a year. From this month, whoever wins the General Election, the squeeze begins on public sector pay as well. This year could see the biggest drop in living standards I can remember, thanks to the policies this government and its monetary and banking authorities are following.
We see the impact on many a High Street, with closed shops and empty properties. We see it in the order books for many private sector companies. We see it in many small and medium sized comapnies, struggling to boost turnover and short of bank finance.
Technically the recession is over, but in practise many are suffering more now than a year ago in the depth of it. Unemployment is too high, growth is feeble and real wages are falling. We need a change of approach to the banks, to monetary policy and to the deficit. This model gives us inflation and poor output at the same time. That used to be called the misery index. Only Labour could call it a recovery, and try to worry people that trying some other approach might “threaten the recovery”.
Promoted by Christine Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU