Millions still flounder despite economic recovery
After years of misery, Britain’s economy is finally picking up pace. But new research suggests life is still getting tougher for many ordinary families. Is it too early for optimism?
‘At last economic growth is returning – not just in America, but now in the eurozone and Britain too.’
This is a message that UK Chancellor of the Exchequer George Osborne has been trumpeting for over a year, insisting repeatedly on evidence of ‘green shoots of recovery.' This time, however, the words come instead from Labour’s Ed Balls, the Shadow Chancellor and Osborne’s chief rival and critic.
Balls still claims that the government has been an obstruction rather than an architect to the recovery, and questions whether ordinary workers are reaping the benefits. Nevertheless, this is the first time that the Opposition has accepted that Britain’s slump is coming to an end.
The statistics are undoubtedly encouraging. In the last two economic quarters, British GDP grew by first 0.3% and then 0.7%. Now a powerful international think tank has predicted that the rate of growth will get stronger still, with Britain’s economy growing by 1.7% during the second half of 2013.
Other developed countries also appear to be turning a corner, but Britain is now recovering particularly fast. And more good news arrived yesterday, with economists hailing a ‘new dawn’ for the British construction industry.
Crisis over? Not everybody is so positive: amid this flurry of good news, another think tank released a worrying report. Even as wind fills the sails of the British economy once again, claims the Resolution Foundation, millions of citizens are left floundering.
A fifth of the UK workforce – 4.7 million employees – earn a wage too low to maintain an acceptable quality of life.
The report weaves a ‘sorry story’ of a country in which many struggle to feed, clothe and house their families. Wonga, a controversial company which provides emergency loans at enormous interest rates, recently reported record profits, suggesting that more people than ever are living beyond their means.
Is the good ship Recovery leaving ordinary workers in the lurch?
Labour leader Ed Miliband warns of a ‘quiet crisis’ unfolding in millions of households as the cost of essential goods rises faster than many peoples’ wages. The country may be getting richer, he says, but ordinary people cannot feel the effects. Abstract statistics about growth and GDP are meaningless if the money only benefits a minority: we should judge an economy’s success by the well being of the people it serves.
Patience, urge more optimistic economists – this recovery is still very young. It may take some time for the new wealth to spread, but the encouraging statistics are still cause for celebration: a growing economy is ultimately a blessing for us all.
- Based on what you have read and observed, is life in your country getting better or worse?
- If GDP is growing, does that mean a government’s economic policy is a success?
- Imagine you are in charge of your country’s economic policy. Write down the top three objectives you would try to achieve.
- Research the term ‘trickle down economics’ and write a brief description of what it means, including arguments for and against.
Some People Say...
“Statistics never tell you anything that matters.”
What do you think?
Q & A
- Do all these statistics actually mean anything for me?
- That’s exactly the question. The general assumption is that as the economy grows, wages will rise and companies will employ more people. Most people, in other words, would be better off – including your family and you. But some are concerned that the extra wealth may be circulating among the wealthiest businesses and individuals. Whether that’s true remains to be seen.
- And what exactly is so bad about Wonga?
- Wonga’s critics say that it deliberately targets people who are financially desperate and offers terms that can lead to financial ruin. There’s nothing necessarily wrong with borrowing money if you are confident about how you will repay it – but be extremely careful with companies that seem to offer easy money.
- Chancellor of the Exchequer
- One of Britain’s four ‘Great Offices of State’. The Chancellor is in charge of Britain’s economy, and is usually considered to be the second most powerful politician in the land (after the Prime Minister).
- The British parliament is divided into two sides: MPs from the ruling parties sit on the Government benches, while everybody else sits with the Opposition. The Opposition is led by a Shadow Cabinet, which is made up of direct opponents for each main Government minister.
- Think tank
- A non-governmental institution that conducts research into political, social and economic affairs. These predictions were made by a hugely influential think tank called the Organisation for Economic Cooperation and Development (OECD).
- Construction industry
- Builders and other construction workers were hit particularly hard by recent British recessions, but last month the construction industry grew at its fastest rate in six years.
- Quality of life
- The Resolution Foundation was using a concept called the living wage: the amount a family needs to earn to cover essential living costs. For most of the UK, this is calculated to be £7.45 per hour, but in London, where property prices are particularly high, the living wage is £8.55 per hour. The living wage is not written into law: the adult minimum wage is currently just £6.31 per hour.