Economic Fightback? Let’s all keep calm!
The headline in this morning’s Times newspaper, ‘Britain on the cusp of economic fightback‘, leapt out at me as I reached the station this morning. The article, by Economics Editor Gary Duncan, begins: “Britain appears to be on the verge of economic recovery amid signs that the worst downturn in decades may be coming to an end.”
Let me say, on behalf of the TUC and millions of trade unionists, I fervently hope he is right.
Following many months of company closures, job losses, mounting debt and financial insecurity, among our members and the wider workforce, the day that the recession comes to an end cannot come soon enough for us.
But let’s keep calm. Fewer people will read David Wighton’s commentary in the same newspaper, but Wighton is surely correct to observe: “It is notoriously hard to call economic turning points, never mind the bottom of the worst recession in memory. And it will be some time before we get conclusive evidence”. Wighton adds: “Certainly, the battle to secure a return to truly sustainable, healthy growth still lies ahead.”
It is nearly three months to the day since the National Institute for Economic and Social Research said that “The recession is on track to become the most serious since the 1930s as GDP declines by 4.3% in 2009”. At the end of June, the OECD Economic Outlook described the UK recession as “severe”, repeated the forecast of a 4.3% decline in 2009 and predicted only a mild recovery in 2010. I’d be delighted if our economic fortunes could turn around so substantially, so quickly, but I have my doubts.
I don’t write any of this to depress our readers. My point here is twofold. First, at some point, the UK’s deficit will need to be repaid. On that, we are all agreed. When that day comes, the TUC will have much to say about who shoulders the burden of that repayment and whether it is done fairly. But in the name of good housekeeping, the Conservative press are – with some success, I have to say – convincing the public that too much may need to be repaid too soon.
The OECD report mentioned above noted that “measures to support the financial sector, dramatic monetary easing and fiscal stimulus have cushioned the downturn”. Some would go further, arguing that the deficit we have now – still not high by international standards – is the price we have paid for preventing the recession from becoming a full blown depression. To start to reduce it before we are clearly and unambigiously on the road to recovery would threaten that recovery. By stating that certain recovery is some way off, I am merely asking policy makers: please, don’t start cutting spending at this stage.
My second point is that an alarming amount of “business as usual” talk still exists. According to this argument, we have had a recession, we will come out of it and we can carry on with the crash and burn economics of before. The beginnings of a return to a grotesque bonus culture can already be seen.
In the TUC’s view, we cannot go back to business as usual. If only one good thing comes out of this recession, it just could be a recognition that economic success must be built on more solid foundations that have been seen in the last couple of decades. A focus on the real economy, a recognition that wealth creation is not the same as money making, a fair sharing of rewards, so that huge salaries and bonuses for those at the top are not justified alongside wages that hardly allow workers to make ends meet at the bottom, are all ingredients of our vision for a new British economy.
It really is time for real economic and social progress in the UK, as well as the protection of the environment and a fairer deal for poorer countries, to become our focus. This could be our moment. Let’s not waste it.