What George Osborne doesn't want you to know about the economy

Including, this is still the slowest recovery for 100 years, the economy is 2.9% smaller and most people are still getting poorer.

After the economy grew for two consecutive quarters and growth forecasts were revised from the terrible to the merely mediocre, George Osborne has decided it's time to declare victory. In his speech earlier today in east London, the Chancellor claimed that "those in favour of a Plan B have lost the argument" and that Britain was "turning the corner". The media, most of which endorsed austerity in 2010, has every interest in echoing his words. But here are five reasons why it's still the Chancellor and his supporters who have all the explaining to do. 

1. This is still the slowest recovery for more than a century

Growth has returned - it was always bound to at some point (and no Keynesian ever suggested otherwise) - but this remains the slowest recovery for more than 100 years. Had Osborne achieved the OBR's original June 2010 forecasts, the economy would now be 8.1% larger. Instead, after a collapse in private and public investment, it's only 4% larger. To make up the lost ground since 2010, the economy would need to grow at 1.3% a quarter for the next two years. Output of 0.7% is the least we should expect (not least when the population is growing). 

2. The economy is 2.9% smaller than before the crash (the US is 4.5% larger)

Owing to three years of anaemic growth, the economy is still 2.9% below its pre-recession peak. In the US, by contrast, where the Obama administration maintained fiscal stimulus, the economy is 4.5% larger than in 2007 after growth three times greater than that of the UK since autumn 2010. And it's not just the Americans who have outpaced us. The UK recovery has been slower that of any other G7 country bar Italy. 

3. Unemployment hasn't fallen for six months and underemployment is at a near-record high

Before the economy returned to growth, the Tories were hailing employment as this government's success story (as they did when the most recent were published). But the data, as so often, tells a different story. After falling from 8.4% to 7.7% between November 2011 and November 2012, the headline rate of unemployment has been stuck at around 7.8% for the last six months, 0.1% higher than its previous low.

That total joblessness has not risen to the heights experienced in the 1980s owes more to the willingness of workers to price themselves into employment (real wages have fallen by a near-unprecedented 9%) than the success of the government's strategy.  

Alongside this, underemployment is surging, with a record 1.43m in part-time jobs because they can't find full-time work. Worst of all, long-term unemployment (those out of work for more than a year) is at a near-record high and youth unemployment is at 973,000 (21.4%).

4.  His deficit reduction plan failed and he's forecast to borrow £245bn more

For a man whose raison d'etre is deficit reduction ("The deficit reduction programme takes precedence over any of the other measures in this agreement," states the Coalition Agreement), Osborne isn't very good at it. Having originally pledged to eliminate the structural deficit by 2014-15 and ensure that debt is falling as a proportion of GDP by 2015-16, he's been forced to push both targets back to 2017-18.

Contrary to what some on the right claim, this isn't due to any lack of austerity. Infrastructure spending has been slashed by 42%, VAT has been increased to 20% and 356,000 public sector jobs have been cut, so that the state workforce is now at its lowest level since 1999. Despite all this, Osborne is still forecast to borrow £245bn more than planned across this parliament and more in five years than Labour did in 13. 

5. Most people are still getting poorer - and that won't change soon

While the media and the political class fixate over GDP, it's a poor measure of the nation's economic health. As we saw even before the crash, a growing economy can disguise stagnating or falling wages for the majority. Between April and June, average weekly earnings (excluding bonuses) rose by just 1.1% compared with a year earlier, 1.7 percentage points below the rate of inflation (2.8%). Since the election, average pay has fallen by £1,350 a year in real terms, with most now earning no more than they were in 2003, a worse performance than every EU country except Portugal, the Netherlands and Greece.

And the situation is unlikely to improve anytime soon. Wages aren't expected to outstrip inflation until 2015 at the earliest and earnings for low and middle income families won't reach pre-recession levels until 2023

George Osborne takes part in a panel session on the main stage at the Campus Party computer coding event at the 02 on September 4, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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In your 30s? You missed out on £26,000 and you're not even protesting

The 1980s kids seem resigned to their fate - for now. 

Imagine you’re in your thirties, and you’re renting in a shared house, on roughly the same pay you earned five years ago. Now imagine you have a friend, also in their thirties. This friend owns their own home, gets pay rises every year and has a more generous pension to beat. In fact, they are twice as rich as you. 

When you try to talk about how worried you are about your financial situation, the friend shrugs and says: “I was in that situation too.”

Un-friend, right? But this is, in fact, reality. A study from the Institute for Fiscal Studies found that Brits in their early thirties have a median wealth of £27,000. But ten years ago, a thirty something had £53,000. In other words, that unbearable friend is just someone exactly the same as you, who is now in their forties. 

Not only do Brits born in the early 1980s have half the wealth they would have had if they were born in the 1970s, but they are the first generation to be in this position since World War II.  According to the IFS study, each cohort has got progressively richer. But then, just as the 1980s kids were reaching adulthood, a couple of things happened at once.

House prices raced ahead of wages. Employers made pensions less generous. And, at the crucial point that the 1980s kids were finding their feet in the jobs market, the recession struck. The 1980s kids didn’t manage to buy homes in time to take advantage of low mortgage rates. Instead, they are stuck paying increasing amounts of rent. 

If the wealth distribution between someone in their 30s and someone in their 40s is stark, this is only the starting point in intergenerational inequality. The IFS expects pensioners’ incomes to race ahead of workers in the coming decade. 

So why, given this unprecedented reversal in fortunes, are Brits in their early thirties not marching in the streets? Why are they not burning tyres outside the Treasury while shouting: “Give us out £26k back?” 

The obvious fact that no one is going to be protesting their granny’s good fortune aside, it seems one reason for the 1980s kids’ resignation is they are still in denial. One thirty something wrote to The Staggers that the idea of being able to buy a house had become too abstract to worry about. Instead:

“You just try and get through this month and then worry about next month, which is probably self-defeating, but I think it's quite tough to get in the mindset that you're going to put something by so maybe in 10 years you can buy a shoebox a two-hour train ride from where you actually want to be.”

Another reflected that “people keep saying ‘something will turn up’”.

The Staggers turned to our resident thirty something, Yo Zushi, for his thoughts. He agreed with the IFS analysis that the recession mattered:

"We were spoiled by an artificially inflated balloon of cheap credit and growing up was something you did… later. Then the crash came in 2007-2008, and it became something we couldn’t afford to do. 

I would have got round to becoming comfortably off, I tell myself, had I been given another ten years of amoral capitalist boom to do so. Many of those who were born in the early 1970s drifted along, took a nap and woke up in possession of a house, all mod cons and a decent-paying job. But we slightly younger Gen X-ers followed in their slipstream and somehow fell off the edge. Oh well. "

Will the inertia of the1980s kids last? Perhaps – but Zushi sees in the support for Jeremy Corbyn, a swell of feeling at last. “Our lack of access to the life we were promised in our teens has woken many of us up to why things suck. That’s a good thing. 

“And now we have Corbyn to help sort it all out. That’s not meant sarcastically – I really think he’ll do it.”