What Osborne didn't mention: wage growth has been revised down

The Chancellor boasted of higher GDP and employment, but the living standards squeeze is set to continue.

For the first time since he became Chancellor, George Osborne arrived for today's Autumn Statement brandishing unambiguously improved economic forecasts. In the triumphalist manner of Gordon Brown, he boasted of "the largest improvement" at any Budget or Autumn Statement for 14 years. Growth is now forecast to be 1.4% this year (up from 0.8%) and 2.4% (up from 1.8%) next year. Unemployment is forecast to be 7.6% this year (down from 7.9%) and 7.1% next year (down from 8%). Borrowing is forecast to be £111bn this year, £9bn lower than expected in March (although still £41bn higher than expected in 2010), and £96bn next year. 

But there was one set of forecasts that Osborne didn't mention: wages. Unlike every other measure, the OBR now expects earnings growth to be weaker, not stronger, than it did at the Budget. The forecast for this year was left unchanged (at 1.5%), while that for next year was revised downwards by 0.2% to 2.6% and that for 2015 by 0.4% to 3.3%. As a result, after already falling by an average of £1,600 since 2010, wages will continue to lag behind inflation in 2014 and will be flat in 2015. 

The danger for Osborne is that even as the UK grows faster than any other G7 country, most families won't feel the benefits, not least in an economy as unequal as Britain's. Labour will still be able to warn that this is a "recovery for the few, not the many" right up until May 2015. 

For that reason, it is far from certain that the UK's economic gains will translate into political gains for the Tories. When Osborne and David Cameron accuse Miliband and Balls of desperately trying to avoid talking about the economy, they should remember that, to most voters, living standards are the economy.

Today, in an attempt to show that he is not oblivious to the squeeze on voters' incomes, the Chancellor offered baubles including a freeze in fuel duty, a reduction in green levies, free school meals for infant pupils and a £1,000 cut in business rates for small firms. But for voters enduring the longest fall in living standards since 1870, that is very small beer.  

George Osborne talks to UK scientists in No. 11 Downing Street on December 4, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Show Hide image

Appreciate the full horror of Nigel Farage's pro-Trump speech

The former Ukip leader has appeared at a Donald Trump rally. It went exactly as you would expect.

It is with a heavy heart that I must announce Nigel Farage is at it again.

The on-again, off-again Ukip leader and current Member of the European Parliament has appeared at a Donald Trump rally to lend his support to the presidential candidate.

It was, predictably, distressing.

Farage started by telling his American audience why they, like he, should be positive.

"I come to you from the United Kingdom"

Okay, good start. Undeniably true.

"– with a message of hope –

Again, probably quite true.

Image: Clearly hopeful (Wikipedia Screenshot)

– and optimism.”

Ah.

Image: Nigel Farage in front of a poster showing immigrants who are definitely not European (Getty)

He continues: “If the little people, if the real people–”

Wait, what?

Why is Trump nodding sagely at this?

The little people?

Image: It's a plane with the name Trump on it (Wikimedia Commons)

THE LITTLE PEOPLE?

Image: It's the word Trump on the side of a skyscraper I can't cope with this (Pixel)

THE ONLY LITTLE PERSON CLOSE TO TRUMP IS RIDING A MASSIVE STUFFED LION

Image: I don't even know what to tell you. It's Trump and his wife and a child riding a stuffed lion. 

IN A PENTHOUSE

A PENTHOUSE WHICH LOOKS LIKE LIBERACE WAS LET LOOSE WITH THE GILT ON DAY FIVE OF A PARTICULARLY BAD BENDER

Image: So much gold. Just gold, everywhere.

HIS WIFE HAS SO MANY BAGS SHE HAS TO EMPLOY A BAG MAN TO CARRY THEM

Image: I did not even know there were so many styles of Louis Vuitton, and my dentists has a lot of old copies of Vogue.

Anyway. Back to Farage, who is telling the little people that they can win "against the forces of global corporatism".

 

Image: Aaaaarggghhhh (Wikipedia Screenshot)

Ugh. Okay. What next? Oh god, he's telling them they can have a Brexit moment.

“... you can beat Washington...”

“... if enough decent people...”

“...are prepared to stand up against the establishment”

Image: A screenshot from Donald Trump's Wikipedia page.

I think I need a lie down.

Watch the full clip here:

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland