From the TUC

UK can’t escape recession through austerity

02 Jun 2012, by in Economics, International

Last week the European Commission published a series of reports on what individual EU member states should be doing about their economies. Known as Country Specific Recommendations (or CSRs), these reveal that the Commission’s worldview – despite the recessionary tides surging through Europe – is still biased towards austerity, even as Europe’s leaders attempt to erect a smokescreen by prattling about growth.

One problem is that CSRs are trying to achieve too many things at once, at a time when the UK needs to consider what its priorities are. The TUC agrees with the Commission in its view that economic activity will remain subdued. We were disappointed, although not surprised, that the UK went back into recession this year. We are concerned about unemployment, especially youth and long-term unemployment. As the Commission notes, the UK’s deficit is projected to fall more slowly than previously expected, due to a weaker growth outlook in the medium term.

We agree that more investment is needed, especially to support infrastructure. We also agree that skills mismatches and unaffordable childcare are problems that exacerbate unemployment. We agree with the principle behind initiatives to support the employability of young people,  especially those not in education, employment or training (so-called NEETs), the widening of apprenticeships, and the assisting into the labour market of people from jobless households.

But it is impossible to address such problems properly when austerity is being pursued at such a pace. Measures to support employment opportunities for NEETs, or helping jobless households, require investment. The same is true for supporting infrastructure. Extending apprenticeships is proving difficult in a voluntaristic model of skills training.

For these reasons, whilst we wish to see the deficit removed in a timely way, the TUC believes the priority for the UK is to restore and then entrench growth. The UK Government is using the language of growth more and more, but is failing to achieve this, due to its attempts to pay off the deficit faster than is possible. The deficit reduction plan should, therefore, be replaced with a plan for growth and jobs, which will make deficit reduction easier in the medium to longer term, as fewer people claim benefits and more people in work pay taxes.