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"With fresh figures showing a return to economic growth over last year, George Osborne has a spring in his step. Growth is back, jobs are being created; his plan is vindicated in time for today's budget. There’s work still to do, but he’s building a 'resilient economy' he believes.
"Yet somehow most of us aren’t sharing the joy. A Sunday Mirror poll shows just one in eleven think things have got better for them over the last year. 44 per cent think they’re finding it harder and harder to pay bills. And over half think job prospects for young people have worsened," writes James Meadway, senior economist at NEF (New Economics Foundation).
"It’s George Osborne v the British public. They can’t both be right. So what’s really going on? New NEF research, out today, looks beyond the headlines to settle the question.
"The economy is certainly growing, with official GDP figures showing the fastest rate of growth since 2007. But this doesn’t mean most of us are getting better off. Real earnings – earnings after taking account of rising prices – have fallen and fallen again since 2010. This long, drawn out decline in most people’s living standards is unprecedented in recent history. You have to go back to the 1870s to find a similar period of decay…"
The point here, NEF rightly says, is that GDP can’t tell us everything about how an economy is performing. The UK might now have returned to growth in statistical terms, but underlying problems remain. Only by looking at a set of alternative economic indicators can we identify what these are, and how to move towards a secure, long term recovery.
As I observed in my own piece, 'Beyond the Budget: we need a major economic transformation' (http://www.ekklesia.co.uk/node/20292), "Everyone needs a stake… That means, in a wider sense, rethinking what really constitutes 'domestic product' and 'national product', incidentally – what counts, what we value, what we regard as beneficial to our social, ecological and economic flourishing, and how we measure that."
James Meadway's work at NEF focuses largely on developing responses to the recession and austerity, incidentally. He leads the team developing a new analytical model of the UK economy, aiming to develop a better understanding of how the financial system, production, and the environment interact to shape economic outcomes. Before joining NEF he worked as a policy advisor at HM Treasury, covering regional economic development, and science and innovation policy, and as senior policy advisor at the Royal Society.
* Read the full NEF Economic Healthcheck: http://www.neweconomics.org/publications/entry/economic-healthcheck-a-re...
* Ekklesia's 2014 Budget coverage: http://www.ekklesia.co.uk/budget2014
* On Twitter, follow the hashtag: #Budget2014
© Simon barrow is co-director of Ekklesia. Follow him on Twitter at @simonbarrowTweet