British Conservatives Are Hailing a Return to Economic Growth After Four Years of Idiotic Policy – But Not So Fast

Real Wages Have Fallen the Most in 50 Years

In Britain the Conservatives adopted economic policy aimed at budget deficits and declined to follow the American example of fiscal stimulus.  The result was entirely predictable.  The American economy recovered quickly and the British economy stayed in recession.  But now the British economy is starting to grow, so naturally Conservatives in charge are saying that their policies worked.  They really did, much the same as a weather forecaster who predicts rain in the Mojave Desert is vindicated when it rains after 276 straight days of sun.

But statistics, those nasty things that don’t lie tell the real story of Britain’s economy, and the real story is that working men and women lost ground and have not recovered.

The value of wages in real terms has been falling consistently since 2010, the longest period for 50 years.

The decline, which means that the cost of living is outstripping salaries, was attributed to low growth in productivity, or the goods and services that are produced in relation to the workforce.

Different rates of inflation between what is produced and what is consumed have also had a damaging effect on pay, said the Office for National Statistics, which provided the figures.

The research followed a report by the Institute for Fiscal Studies (IFS), which said that while the fall in household incomes has now probably come to a halt, living standards are still “dramatically” down on what they were before the financial crisis began in 2008.

The Government said last week that most workers have seen their take-home pay rise in real terms in the past year. But the ONS figures showed a drop in salaries when considered over a longer period.

Real wage growth averaged 2.9 per cent per year in the 1970s and 1980s; 1.5 per cent in the 1990s; and 1.2 per cent in the 2000s. But it has fallen to minus-2.2 per cent since the first quarter of 2010, the figures showed.

Frances O’Grady, the general secretary of the TUC, said: “Over the last four years British workers have suffered an unprecedented real wage squeeze. Worryingly, average pay rises have been getter weaker in every decade since the 1980s. Unless things change, the 2010s could be the first ever decade of falling wages. A return to business as usual may only bring modest pay growth.

So there it is, the face of British recovery, the fruit of Conservative economic policy.