Austerity or growth?
According to a survey of economists and policymakers published in The Economist magazine, it is clear that the austerity mantra has a strong chance of getting traction in the UK, but there is a significant chance that it will not get traction at all.
The survey by the Oxford Economics think tank, which was conducted in May and June, looked at the economic performance of the UK economy since the end of the recession in 2009.
It found that there was a “significant and growing gap between the level of economic activity and expectations”.
“The gap between expectations and economic activity is widening.
In the UK in 2020, only 17% of the public expects that their personal income will be higher than it was in 2009, compared with 59% in 2010 and 72% in 2011.
It is clear there is an opportunity for an optimistic approach, and that the economic policy framework for 2020 will be driven by a belief in the potential of the private sector and a belief that growth is a necessary condition for a well-functioning economy,” the report said.
“The outlook is much more bleak than the one projected by most economists.
The economic outlook is deteriorating as the economy falls further behind the rest of the developed world.”
The report said that the gap between expected and actual economic activity has grown to an average of 1.9% a year since the onset of the financial crisis.
“Despite the economic challenges facing the UK,” the survey said, “the public has not yet fully recovered from the financial collapse of 2008, despite the fact that the public’s expectations for the future of the economy have fallen substantially.”
It added that “most UK economists expect the UK to remain in recession for at least two more quarters”.
But the report noted that while the public is not yet feeling the full impact of the crisis, there is “a growing body of evidence that the UK’s economic recovery may be fragile, and there is little evidence that this recovery will last.”
What is austerity?
The word “austerity” was first used in Britain in the 1990s to describe the policies of the Conservative government of Margaret Thatcher, who imposed the “shock doctrine” on Britain’s economy during the 1980s.
It came to symbolise a drastic reduction in spending and public spending as a way to get the economy back on track.
In other words, “cuts”.
The austerity mantra is often used to justify the spending cuts that have been implemented since the financial crash of 2008.
In contrast, growth has been a key objective of successive governments in the United Kingdom.
The report found that while growth was “significantly lower” than it would have been under previous governments, the gap was “large and growing”.
The report noted: “The recovery of the British economy since 2009 has been far more impressive than that achieved by the United States during the same period, which has seen the largest recovery in the history of the world.”
However, it added: “While the UK recovery is far from perfect, there are significant signs that it is close to being able to deliver a recovery that is broadly acceptable.”
What about growth in the eurozone?
According the Oxford economists, growth in Europe has “remained stagnant” in recent years, despite a sharp fall in unemployment.
The UK has had the biggest fall in GDP growth since 2008, with the eurozone as a whole growing by just 0.3% in the three years to March 2019.
However, there was an increase in the proportion of jobs created in the past year, with Germany growing by 2.9%, France by 3.5%, Spain by 2%, and Italy by 2% compared with the previous year.
The increase in employment has come despite the UK experiencing the highest unemployment rate in the developed countries.
In fact, the British unemployment rate has now been rising for two years in a row, which is more than double the overall rate.
However the report pointed out that “there are signs of positive signs of recovery, with unemployment rising in Spain, Italy, and Germany”.
The survey noted that “the UK economy is still growing at a slow pace” and that “some of the signs of improvement are evident, but a further recovery may not be possible in the medium to long term”.
The Oxford economists also found that growth has continued to be affected by the eurozone crisis.
However “this situation does not necessarily suggest a clear path forward”.
What about jobs?
The UK government’s economic growth figures for the last three years show that the number of jobs in the private and public sectors is falling.
According to the OECD, the number has fallen by 2 million jobs since 2011, but this is not all bad news.
According the report, it noted that unemployment has dropped by nearly 100,000 since 2012.
The jobless rate in Britain is also falling.
“In the private, non-agricultural sector, the jobless figure fell by 3 million jobs from 5.3 million in 2011 to 5.1 million in 2016,” the Oxford researchers said.
The authors pointed out “there