• Text size      
  • Send this article to a friend
  • Print this article

So is the economy really back where it was six years ago? Not quite

SO, did the earth move for you?

Were the champagne corks popping?

While the "major milestone", as David Cameron put it, of the economy creeping above where it was six long years ago is to be welcomed, it should be put in context.

Firstly, it has only been reached because of Britain's mighty services sector, which makes up two-thirds of the economy. It is now 2.9 per cent ahead of the early 2008 level; yet manufacturing is still 7.4 per cent behind and construction 10.7 per cent.

So the UK economy remains unbalanced.

Secondly, GDP per head is more than five per cent below the peak of six years ago and, because of a growing population, up by two million, it is forecast this will take another three years to catch up.

Thirdly, pay growth is just 0.3 per cent, well behind inflation at 1.9 per cent; which, of course, means most of us are still getting poorer.

Hence, Bank of England Governor Mark Carney's latest emphasis on wages as a factor in determining when the dreaded interest rise comes. Rising growth could be stopped in its tracks if mortgage increases squeeze ordinary folks' budgets so they stop shopping.

The cost of living reality was emphasised by the two Eds, who contend that, for all the upbeat Coalition rhetoric, most of us are still not feeling the gain, only the pain.

And yet when it comes to the politics, the continuing flow of positive numbers, whether on growth or employment will have a cumulative effect, making the untelegenic Mr Miliband's chances of gaining power all the harder.

Meanwhile, Nick Clegg was keen to stress how without the plucky Liberal Democrats, who held their noses and in 2010 nipped into the political bed with the Tories, the recovery would never have happened. But he knows junior coalition partners rarely get the praise when things go well and ­invariably get the flak when they go wrong.

So with the LibDems' UK poll ratings wallowing as low as six per cent, that elusive feelgood factor cannot come soon enough for the Deputy Prime Minister and his colleagues, for whom a little sprinkling of joy could just about save them from the electoral abyss.

Contextual targeting label: 
Local government

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.