The defining question of 2014 will be ‘Whose growth?’
As we end the year amidst a slew of positive headlines praising economic recovery many commentators expect 2014 to be a great year for growth. But exactly whose recovery is it? Unless you’re the one voter in every 50 that says they’re benefiting from economic growth, it’s probably fair to assume that it’s not yours or your family’s recovery – according to the results of a new TUC-commissioned poll out today. New year optimism doesn’t extend to the economy either as the poll results show that only one in five voters expect to feel the benefit of the recovery in 2014.
But is it any wonder when, six years on from the crash, our economy remains dangerously unbalanced? The government’s failure to deliver a growth strategy based on rebalancing the economy through exports and investment, means that growth is instead coming from rising house prices and people running down their savings. And while jobs growth is welcome, too many jobs are insecure and combine the three lows: low skill, low productivity and low pay.
As a result, 2014 will be a very challenging year for many hard-working people with in-work poverty on the rise and the longest squeeze on living standards in a generation. They may have accepted spending cuts, falling real wages and unemployment as a consequence of the damage done by the crash but, as our poll shows, they also expect to share in the in the economic recovery.
This is bad news for the government. Voters do not think they will benefit from the recovery next year, they do not expect their wages to keep up with living costs and they don’t trust the government to spread the benefits of recovery fairly. Furthermore, the poll also reveals a major gulf between voters and the government about the future direction of policy.
Above all, voters do not share the Chancellor’s ambition to permanently shrink the state. In fact, by more than two to one they want to see services restored when the economy grows, not permanently cut. They accepted austerity as unpleasant medicine but now they are realising that what they thought were the unpleasant side effects are what the Chancellor sees as a cure.
But what kind of cure is it when food banks are at an all time high and more and more people are trapped in insecure employment? Zero hours and pay cuts for the many, tax cuts and pay growth for the few at the top. Is that really what recovery looks like?
This is why 2014 will be a crucial year and why it will be dominated by a single political question – whose growth? Do we really want to go back to a business as usual version of the pre-crash economy, based on housing bubbles, an over-mighty finance sector and increasing inequality as a growing proportion of the workforce fail to share in prosperity?
Or do we want to build a new, genuinely rebalanced economy that through investment, growth and active government aims for a high-skill, high-pay, high-productivity economy that shares out prosperity to all? I know which side unions are on.
Key findings from the TUC-commissioned YouGov poll include:
- Just 2% of voters say they have already benefited from the economic recovery and only a further 18% expect to benefit from the recovery during 2014.
- A big majority expect the living standards crisis to continue in the new year. Only one in eight (13%) of those in work expect their pay to at least keep up with the cost of living, the same proportion who report that their pay at least kept up with the cost of living during 2013.
- Voters do not back plans for a permanently smaller state. More than half (56%) agree with the statement “As the economy grows I want to see most or all of the services that have been cut restored” compared to three in ten (29%) who back “As the economy grows I want to see most or all of the cuts retained.”
- Only 21% “expect the gains of an economic recovery to be fairly shared across the country and society”. More than twice as many (58%) “expect the gains of an economic recovery to mainly go to the types of people and parts of the country who are already doing well.”