Saturday, 8 February 2014

Economic statistics ... what to believe?

My latest article in the Cornish Guardian addressed recent data published on economic performance. It was as follows:

Statistics have been at the core of recent arguments about the economy, with political and other groups focussing on different aspects of the data.

According to the Office for National Statistics (ONS), the United Kingdom economy grew by 1.9% in 2013 – the strongest rate of growth since 2007.

The Chancellor of the Exchequer predictably welcomed the figures and used them to claim that the Government’s economic policies were working.  He was reported as telling the BBC that: "There is plenty more to do, but we're heading in the right direction."

Equally predictably, others disagreed with George Osborne. Many preferred to comment on the “cost-of-living crisis” suffered by many working people, who are struggling to pay their bills and can see no recovery at all.

So who is right?

Well, the ONS may be recording growth for the United Kingdom as a whole, but the regional picture is very varied. Much of the recent growth has, once again, been centred on London and the South of England – while other areas have fared much less well.

The latest “county” figures – dating to the previous year of 2012 – show the Cornish economy had slipped back during the last two years. It is now the region with the lowest economic performance, at only 61.2% of the UK average.

George Osborne claims he is “rebalancing the British economy." I feel it is about time he attempted to tackle the unbalanced nature of Britain’s economy and the massive difference between the various regions.

The Institute for Fiscal Studies (IFS) has meanwhile published a report which shows that living standards have fallen dramatically since the recession began. And economists believe they will not reach pre-crisis levels for a number of years.

The report found that between 2008 and 2013, inflation rose by 20%, while energy prices shot up by 60%, with food prices increasing by 30% over the same period. As a consequence, the income of a “mid-range” household is estimated to be about 6% below what it was pre-recession.

The report also found that the impact on poorer families is even more severe, because a much greater proportion of the spending of the less-well-off goes on the inflated cost of food and energy.

And if that wasn’t bad enough, it is many of these poorer families that will be squeezed even harder with the Government’s incoming cuts to benefits and tax credits.


Britnot said...

The only people benefitting from the "recovery" are thepeople at the top, primarily from the South East of England(London). By the way that happens to be the only part of the UK that the Westminster government has any interest in. Countries like Kernow,Wales and Northern Ireland are left to heir own devices without the tools to effectively address the problems.

As long as we are controled by Westminster I fear matters will only get worse. Let us hope the people of Kernow and Wales will follow Scotlands example and vote for their freedom when given the opportunity.

PaulS said...

The recovery is temporary:

1. The national debt is still growing fantastically fast. The 'cuts' have so far lowered the increase in debt by a third, which means two thirds of the cuts are yet to come.

Total debt, including unfunded obligations , has now exceeded 900% of GDP - and that is unrepayable under almost all circumstances.

2. Most of economic growth is based on the availability of cheap energy (nowadays we all have the privilege of the energy equivalent of about 70 slaves each - but slaves that don't cost money to keep - they don't eat, sleep, get sick or die. They just work for us. But now they are four times more expensive than the long term average and that is largely responsible for the near financial collapse.

The world is now limited to only modest economic growth. If that is exceeded, energy prices will skyrocket and we will return to a slump.

As fossil fuel fields are depleted over time, the limit on world economic growth will gradually reduce down to zero, followed by negative growth limit. That's when the real fun begins.

In Cornwall we need to be aiming at self-sufficiency and resilience at whatever lower standard of living we can maintain, not trying to go for growth, which, almost by definition, is bound to fail.