I’ve just been updating our data for GDP per head of population (from the OECD database plus adding the ONS estimate for 2018) and noticed a startling fact. The age of austerity, starting with the 2010 Coalition government, and on to the Cameron / May governments, has to date been the worst since records began for annual change in GDP per head . The average increase in GDP per head of population, from 2010 to 2018, inclusive is lower than the decade 2000 to 2009, i.e. the decade that included the impact of two terrible years of the peak Great Financial Crisis. From 1971 to 2007, the annual average percentage increase was somewhere between 2 to 2.5%. This includes the 1970s, with all its so-called stagflation, the Thatcher period of deregulation and
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Jeremy Smith considers the following as important: fiscal policy, GDP & Economic Activity, UK
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I’ve just been updating our data for GDP per head of population (from the OECD database plus adding the ONS estimate for 2018) and noticed a startling fact. The age of austerity, starting with the 2010 Coalition government, and on to the Cameron / May governments, has to date been the worst since records began for annual change in GDP per head .
The average increase in GDP per head of population, from 2010 to 2018, inclusive is lower than the decade 2000 to 2009, i.e. the decade that included the impact of two terrible years of the peak Great Financial Crisis.
From 1971 to 2007, the annual average percentage increase was somewhere between 2 to 2.5%. This includes the 1970s, with all its so-called stagflation, the Thatcher period of deregulation and de-industrialisation, and the Major and Blair governments.
Here is the chart that tells the tale:
Data source: OECD and ONS
As you see, the period 2000 to 2007 was slightly above the 1990s but just below the 70s and 80s. Including the huge impact of the crisis and its recession, the whole decade comes in at a pretty miserable 1.22% average.
Yet even this is marginally better than the Conservatives have achieved through their economic policies, whose central feature has been austerity - imposed through public spending cuts. The latest estimate for 2018 from ONS is just 0.8%., which remarkably, at this stage of what should be a full recovery, is below the average for the period, and the worst figure since 2012. Here are the annual percentage figures in table form:
I would not argue that austerity is the only factor at play here, but there can be no doubt that it has had - and still has - a substantial drag effect on the UK economy. It includes the direct impact of cuts, and the “multiplier”. effect. The Brexit effect also exists to some extent notably in the stagnation in business investment, but it is the sustained and self-reinforcing effect of austeirty that has been more important .
For a quick European and international comparison, here is a chart which also draws on OECD data but takes the period from 2008 to 2017 (i.e. includes the Great Financial Crisis and the years since). The UK is low, but the Eurozone comes out even lower, since its austerity policies were even more harsh (and perverse) than the UK’s (though there is great variance between member states).
The Chancellor’s Spring Statement is due shortly. The public finances are such that - even by Conservative economic logic - there can be no excuse but to increase public spending and restore our rapidly decaying public services.
We can now show beyond any doubt that the Conservative Age of Austerity has been a disastrous , historic economic failure. Whatever happens next with Brexit, it’s time for a radical change in economic policy.
It’s time for Government to use the full force of fiscal stimulus, to invest in our country’s future - on infrastructure, health, education and to start implementing the great transformation to the post-carbon era.