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12 February 2011

Ken Clarke’s bad news for the “squeezed middle”

The Justice Secretary goes off-message again.

By Helen Lewis

Ken Clarke has never been the most on-message member of the cabinet. Already this week, he has upset the Tory right by stating that the government would be obliged to comply with European law and give prisoners the vote, despite MPs’ opposition.

Now he’s caused another stir by contradicting the Downing Street line that the economy is likely to rebound quickly from last month’s fall in GDP. He told the Daily Telegraph: “We’re in for a long haul to get back to normality.” He adds:

One reason we’re going to get some political difficulty is that [while] the public knows we’ve got to do something about it, I don’t think Middle England has quite taken on board the scale of the problem.
That will emerge as the cuts start coming home this year. We’ve got to get on with it [but] it’s going to be very difficult. If someone says it’s not as bad as all that, I say [they] just don’t realise the calamitous position we’re in.

As further rumbles of discontent about Clarke emanate from the disgruntled Tory high command, perhaps he should take comfort in knowing that this position puts him in excellent company. Gavin Kelly, former No 10 strategist, argued in the New Statesman in January that although the recession was over, the real pain of the “squeeze” was just about to begin. According to Kelly, the economic narrative of the next few years is just beginning to emerge.

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It is a story not of riding high in the boom years and then falling, only to bounce back quickly and thrive in the years ahead, but one of prolonged squeeze – a tale of growth without gain . . . The typical working household is now poorer in real terms than it was a year ago. In 2011, it will get poorer still. Even as growth resumes and the nadir of the financial crisis fades into memory, millions of families are living through a prolonged, personal recession.

Similarly, the New Statesman‘s economics editor, David Blanchflower, argues that Britain faces a “long slog” back to growth.

The current recession has been much deeper than the 1990s and much more comparable so far to the 1980s which lasted for four years. Currently we are nearly three years in and there is still a long way to go.
NIESR [the National Institute of Economic and Social Research] does not expect output to pass its peak in early 2008 until 2013, which would be around 60 months from when it started. So it would then be much longer lasting than any of the other recessions that have occurred over the last century.
Worryingly, it could well be even worse than this still, unless the growth deniers running the coalition’s economic strategy reverse course and soon.

PS: Incidentally, there’s also a rather wonderful description of Jack Straw in the interview. “The trouble with Jack is that he’s an old-fashioned Eurosceptic of the type who takes his own tea when he goes abroad,” says Mr Clarke.