UK 24th out of 33 in global race for economic growth

The UK is experiencing a slower economic recovery than 23 of the 33 advanced economies monitored by the International Monetary Fund (IMF), according to new analysis published by the TUC on 9th May.

The research, which comes as the IMF begins its two week visit to Britain today, says UK income per head – economic growth that takes account of population change – will not return to its pre-crash level until 2017.

By contrast, income per head in Germany and the US will be over 10 per cent higher a decade on from the financial crisis, while South Asian economies are set to have growth of over 20 per cent.

The TUC says the figures, which are based on the IMF’s latest GDP forecasts, reveal that the UK risks enduring a ‘lost decade of growth’, while many of its economic rivals forge ahead.

With the Chancellor identifying an economic ‘global race’ as the defining challenge for the government, the TUC report shows how George Osborne’s own strategy is causing the UK to fall behind its competitors.

The study also reveals how the UK is emerging from recession at a slower rate than at any time in its recent history.

In 1985, UK income per head was six per cent higher than it was before the 1980 crash. In 1995, UK income per head was seven per cent higher than it was before the 1990 recession. UK income per head is today still six per cent below its 2008 level.

The Chancellor cannot blame Europe for the UK’s economic woes, as the vast majority of the Eurozone’s countries are performing better, says the TUC.

George Osborne faces further embarrassment this week when he hosts a meeting of the G7 finance ministers on Friday. Only Italy are experiencing a slower recovery than the UK among G7 countries.

Recent TUC analyses of the ‘global race’ – available at www.touchstoneblog.org.uk/tag/global-race – have found that the UK is lagging behind most of its G7 competitors on exports, wage growth and manufacturing too.

This slideshow requires JavaScript.

George Osborne must heed the IMF’s recent call for the UK to ease off austerity and follow the example of the US by investing in jobs and infrastructure, says the TUC.

The TUC wants to see a large jobs and infrastructure stimulus, including a jobs guarantee and an extensive house building programme to get growth and confidence back into the economy.

TUC General Secretary Frances O’Grady said: ‘We truly are experiencing a lost decade for growth.

‘While other countries are already seeing a rise in economic output, the UK won’t return to its pre-crash level for another four years.

‘The Chancellor’s commitment to self-defeating austerity has prolonged people’s suffering and put the brakes on our economic recovery – so much so that escaping a triple-recession is considered by some to be a cause for celebration.

‘Even George Osborne’s favourite economic institution, the IMF, is calling on him to change course. Without a fresh approach we will continue to trail our economic rivals and bring up the rear in the global economic race.

‘He should start learning from countries like the US whose ambitious programme of investment in jobs is helping to turn its economy around.’

TUC Campaign Plan 2013: Five steps towards a future that works

TUC campaign to make case for radical economic reform
A jobs guarantee for young people, spreading the living wage across the public and private sectors, putting communities not profits at the heart of public services, and creating a stronger voice for workers in the management of companies are among the TUC’s five key campaign priorities in the run up to the general election, according to its campaign plan published on May 1st.

‘A Future That Works’ sets out five key priorities that will drive the work of the TUC over the next two years. The plan has been agreed by the General Council, which represents the TUC’s 53 affiliated unions who between them have almost six million members.

The campaign for jobs, growth and a new economy will mobilise resistance to austerity, with a series of events across the UK this summer, and will also provide a platform for advocates of pro-growth policies and new economic ideas. This will include an event with former US labour secretary and fierce critic of UK austerity, Robert Reich, who will deliver a lecture at the TUC on 21 May.

The TUC will work with and champion public and private sector employers who reach living wage agreements, as part of its campaign for fair pay and a living wage. The TUC itself became a living wage employer earlier this year.

Opposing the outsourcing and privatisation of public services will be the focus of good services and decent welfare. As well as the Save Our NHS campaign and the Action for Rail campaign to put the rail system back into public ownership, the TUC also plans to support parents and education unions against future attempts to allow state schools to be run for profit.

Having helped see off some of the government’s attacks on employment rights in the Beecroft report, the TUC will continue to press for respect and a voice at work for UK employees. The TUC aims to campaign to retain rights to paid holidays, a proper lunch break and reasonable hours at work that are under threat as the government attempts to repatriate powers back from the EU.

Finally, the TUC’s strong unions programme will train of a new generation of union reps to take the TUC campaign messages to non-unionised workers and workplaces and give a voice to a new generation of young employees.

TUC General Secretary Frances O’Grady said: ‘Margaret Thatcher’s legacy of deregulated capitalism and the cult of finance crashed dramatically in 2008. But the government is still peddling the same old busted model.

‘The government’s failed austerity drive means it could take another ten painful years just to get back to where we were before the recession.

‘Not only will the TUC and unions continue to be the backbone of Britain’s anti-austerity movement but we will also lead the call for new economic ideas.

‘We will champion and work with those who are helping to create a fairer economy – from paying a living wage to giving staff a bigger say in how their company is run.

‘As well as a decent wage, people deserve decent public services. Having overseen the fragmentation of the NHS, ministers now want to introduce the profit motive into Britain’s schools. The TUC will fight this privatisation drive, which we know the public doesn’t support.

‘The TUC is not alone in wanting radical economic and social change. That’s why we’ll be calling on communities and campaign groups nationwide to join our campaign for a new economic settlement that involves and works for the whole country.

‘The next election is likely to be fought over the economy and our living standards crisis. We want to see decent jobs, fair pay, good services and a stronger voice at work at the heart of the plan to deal with these big economic challenges.’

TUC Campaign Plan 2013: Five steps towards a future that works

TUC Campaign Plan 2013: Five steps towards a future that works

Download the plan (pdf format 5.2MB)

Construction sector has shrunk by 10 per cent since coalition took office, says TUC

Press release from TUC

Commenting on figures released on 25th April by the Office for National Statistics (ONS), which show that the UK economy grew by 0.3 per cent in the first quarter of 2013, TUC General Secretary Frances O’Grady said:

“The Chancellor has set the economic bar so low that avoiding the UK’s first ever triple dip recession is considered good news.
”Today’s figures have taken us back to where we were six months ago, and not much further on from when the Chancellor started his austerity experiment.

“The economy is flat-lining, unemployment is growing and the much-needed rebalancing of the economy, away from financial services and the South East, has failed to materialise. It’s no surprise we face a housing shortage when the construction sector is now nearly 10 per cent smaller than when the Chancellor took office.
“The government’s economic policies are still failing on every measure that matters to people.”

TUC

UK second last among G7 countries in ‘global race’ for export growth

Reproduced with kind permission of TUC – Trades Union Congress

The UK has experienced the second slowest export growth of all G7 countries since 2010, with only Japan faring worse, the TUC said on Monday 18th February as it published its submission to the 2013 Budget.

With the Chancellor identifying an economic ‘global race’ as the defining challenge of the government, the TUC report shows how George Osborne’s own strategy is causing the UK to fall behind its competitors.

Recent figures from the International Monetary Fund (IMF) show that over the last two years export growth in the UK has been slower than five of its G7 competitors – the US, Germany, France, Italy and Canada. Only Japan, whose economy is still reeling from the 2010 tsunami and earthquake, is doing worse than Britain when it comes to exports.

The Chancellor cannot blame Europe for the UK’s economic woes as the three biggest Eurozone countries are all performing better on exports, says the TUC.

In terms of economic growth since 2012, the UK is ranked just 158th of the 184 countries monitored by the IMF.

Instead, the TUC believes that a combination of self-defeating austerity and a complete absence of a strategy to grow the economy are dragging the UK down.

The TUC Budget submission calls for an immediate stimulus to boost demand. This should include stopping damaging welfare cuts that are reducing people’s living standards – particularly those of low-income families – and reversing cuts in capital spending that have badly affected the construction and housing sectors.

But as well as an immediate stimulus, the TUC submission calls for the government to deliver a proper growth strategy, along with stronger tools to deliver it.

The Chancellor should start by introducing many of the measures championed by Lord Heseltine in his recent report ‘No Stone Unturned’, says the TUC. This should include an active industrial policy, led by a National Growth Council that would also include business and union representation.

The submission also says that the government needs to address another key blockage in the UK economy – a lack of lending to firms outside of finance and real estate. To address this problem the Chancellor should set up a publicly-owned business bank that targets growing industries, such as green technology and high-value manufacturing.

In order to work properly, a new business bank should have sufficient capital says the TUC, and suggests £40bn initially over four years. It should also have the ability to raise funds on capital markets.

The Budget submission also calls for more action to tackle growing pay inequality which, if left unaddressed, could result in most workers receiving no benefit from future economic growth.

The submission proposes tackling soar-away directors’ pay by forcing companies to disclose pay ratios between the lowest, median and best paid company staff, as well as introducing employee representation onto remuneration committees.

The Chancellor can also raise revenues by simplifying the tax system through the closure of tax loopholes, says the TUC. This should include aligning capital gains tax with the top rate of tax and strengthening the proposed General Anti-Avoidance Proposal.

TUC General Secretary Frances O’Grady said: ‘The UK is currently gripped by two big crises – falling living standards and economic stagnation. For all the Chancellor’s talk of the UK paying its way in the world, his own strategy is dragging the economy down.

‘On growth, exports and investment the UK is falling behind its competitors in Europe and across the globe. In order to address this, the Chancellor must announce a change of direction next month.

‘He can start by taking up Lord Heseltine’s proposal for a new growth council and prioritising new infrastructure projects. It is far better to invest in improving our transport and energy networks than to pay for the costs of economic failure that high unemployment and falling wages bring.

‘But the Chancellor also needs to do more to help families suffering through the UK’s living standards crisis. With real wages falling since 2009, the government has heaped on the pressure by raising VAT, cutting welfare support and freezing pay for public servants.

‘Giving low-paid families a few hundred pounds in a tax break is no good if they are also losing thousands more in tax credits and when wages are failing to rise as the economy stagnates. Instead we need to see a reversal of benefit cuts and policies that can secure better wages, including measures to tackle soar-away pay at the top.’

TUC

Britain needs a pay rise to kickstart growth

The following article has been reproduced with the kind permission of PCS – Public Commercial Services Union

Why is employment rising when the UK economy is still flatlining? Our new research could provide the answer.

Figures show that since the onset of recession in 2008 the real value of wages has fallen by 7%, or more than £50 billion a year. During the same period there has been a real terms drop in consumer demand of 5%.

Our report, ‘Britain needs a pay rise’, published today (Tuesday 12), argues this fall in the value of pay could be a major obstacle to the return of economic growth.

The report also busts the myth that civil servants are paid more than their private sector counterparts.

Serious debate on pay

Using data from the Office for National Statistics and research by the Institute for Fiscal Studies, and government departments, employment specialists Croner and Incomes Data Services, and the Resolution Foundation, other findings include:

  • The government’s four-year pay policy, plus the increase in pension contributions, will cut almost £7 billion a year from the value of public sector employees’ pay by 2015.
  • Median pay in the civil service is 4.4%, or £1,263, lower than median pay in direct private sector comparators.
  • At executive officer level civil service pay was 10% below private sector comparators and at administrative officer level it was 8%.
  • These discrepancies in pay for executive officers and administrative officers are found in every nation and region in the UK.

The report aims to generate a serious debate about the effects of low pay and government pay policy on the UK economy.

It comes as 250,000 of our members who work in civil and public services start voting in an industrial action ballot over cuts to their pay, pensions and terms and conditions.

We have asked for a pay rise for civil servants of 5% or £1,200 and for the living wage to be written into government contracts with private sector employers.

Money in people’s pockets

While ministers are not able to increase wages across the whole economy, increases in public sector pay and the national minimum wage – and support for the extension of the living wage by insisting on it for government contracts – would stimulate demand and act as a catalyst for the private sector.

PCS general secretary Mark Serwotka said: “Almost everyone can now see that austerity is not working. The chancellor George Osborne is borrowing more for failure, we are on the verge of a triple dip recession, food banks are on the rise and pay day loan sharks are preying on the vulnerable.

“We believe the government’s pay policy, built on the lie that hardworking civil servants are paid too much, is having a seriously damaging effect on the whole economy.

“Instead of burying their heads in the sand and hoping for the best, ministers can and should act now to put money into people’s pockets and back into our economy.”

Click here to download the full report.

Consumer confidence fell to six-month low in October

As many predicted, the direct result of the government’s savage austerity measures, saw the UK economy suffer a double dip recession. But how many foresaw a triple dip; it’s now looking a distinct possibility. The cuts are hurting; they are not working. Whilst people are losing their jobs; seeing their pay frozen or cut and going hungry and cold, the government pontificates about “handing £58bn of Whitehall cash to city-based engines of growth, co-ordinated by businesses and local councils” whilst still advocating their deficit reduction strategies and the destruction of the public sector / services, the NHS and the Welfare State.

Below is an article from The Retail Bulletin


UK consumer confidence slipped to a six month low in October as households became more pessimistic about their financial situation over the coming 12 months according to a survey by GfK NOP.

The GfK Consumer Confidence Index dipped to -30 in the month from -28 in September. This was the lowest reading since April.

While the index measuring changes in personal finances during the last 12 months decreased three points to -24, the forecast for households’ expectations for the next twelve months fell five points to -13. This is three points lower than October 2011. The survey also revealed a reluctance to invest in major purchases with the index dropping two points to -33 in the month, one point lower than this time last year.

The index measuring the expectation for the general economic situation over the next 12 months decreased to -29, two points higher than October 2011. The ‘now is a good time to save’ index increased one point to -17.

Nick Moon, managing director of social research at GfK, said: “Just as the economy moves out of recession consumer confidence dips again. While we are not quite back to the levels of this time last year, the Index has not been this low in six months.

“While the Olympics are thought to have boosted GDP in the last quarter, the late Summer boost in consumer sentiment has now faded. The government will be concerned that the economic bounce will follow a similar path and deflate during the Autumn.

“The fragility of the recovery is underlined by the fact that people are more worried about their own financial situation over the next 12 months. This certainly doesn’t suggest there will be a spending boom on the back of the official emergence from recession.”

The GfK survey was conducted amongst a sample of 2,004 individuals aged over the age of 16 between 5 and 14 October 2012.


Austerity isn’t working

2.59 million – total number of people unemployed (8.1% of population)
475,000 – number of job vacancies

1.57 million – number of people claiming Job Seekers Allowance

1 million – number of people aged under 25 who are unemployed

904,000 – number of people unemployed for over 12 months

8.12 million – number of people working part time

1.42 million – number of people working part time because they cannot find full time work

1.9million – number of people in full-time employment but want / need to work more hours

1.75 million – number of children in workless households

1.5% – average annual pay rise (including bonuses)
2.5% – annual rate of inflation

2011 4th Quarter growth rate (minus) -0.2%
2012 1st Quarter growth rate (minus) -0.3%
2012 2nd Quarter growth rate (minus) -0.7%

Public sector net debt now stands at above £1 trillion, compared to £940 billion a year ago, and represents 65.7 per cent of the UK’s GDP, up from 61.8 per cent last year.

In July 2012, the Govt was required to find an extra £600m to plug the gap between spending and tax revenues, having registered a £2.8bn surplus in the same month in 2011.

In the four months since George Osborne’s March 2012 Budget the Govt has now borrowed £9.3bn more than it did over the same period last year.

Social benefit payments have risen by 7 per cent, reflecting the fact that more people are on the dole than this time last year.

Sources: Guardian – ONS – BBC – Trading Economics – Independent