The UK’s economic recovery is far behind schedule and is doing little to boost people’s living standards, according to new analysis published by the TUC today (Tuesday).
The analysis shows that had growth risen in line with the Office for Budget Responsibility’s (OBR) original forecasts the economy would have grown by 7.9 per cent since 2010 instead of 4.2 percent, a difference in cash terms of £60bn.
In addition, average earnings in mid-2013 were more than 25 per cent (£780 a year) lower than the OBR predicted when the government took office.
The study reveals how the government’s failure to deliver the OBR’s projections has impacted on the following key areas:
- GDP – The economy is £60bn smaller than the OBR originally forecast it would be in mid- 2013, with GDP growing at half its expected rate.
- Average Earnings Growth – Average earnings are now £780 a year lower than the OBR expected. Earnings growth has undershot expectations by more than a quarter.
- Business Investment – Business investment grew at just a quarter of the pace expected, leaving the UK with a £24.8bn investment gap.
- Exports – UK exports are down 20 per cent on OBR forecasts costing the economy £33.2bn.
- Unemployment –The current unemployment rate of 7.8 per cent is higher than the OBR’s prediction of 7.3 per cent. This equates to 158,000 more people out of work than expected.
The TUC says the findings highlight how the government’s economic mismanagement has led to underperformance across a range of important economic indicators.
Household incomes have faced a far greater squeeze than would have been the case with stronger growth, investment in new technology and research has been held back and the UK’s export markets have lost vital ground to our competitors.
As well as over 150,000 more people being out of work than forecast, over 80 per cent of jobs that have been created since 2010 has been in low-paid industries. And nearly half (46 per cent) of the total rise in employment has been in temporary work.
The TUC believes that this rise in low paid and casual temporary work, along with increases in involuntary part-time work and zero-hours contracts, show that beneath the headline employment figures lies an increasingly insecure, vulnerable workforce.
The TUC says that while it welcomes recent signs of a recovery, so far growth has been too little too late, and what improvements we have seen have done little to address people’s living standards. Recent research by the TUC shows that UK workers are still enduring the longest wage squeeze since the 1870s.
Everyone hopes that the current recovery continues, but the government’s flawed approach means that we are starting from a far weaker point that was necessary, which has damaged living standards and our future economic prospects, says the TUC.