Barber says Chancellor should invest in jobs, not make further cuts, if he wants to end recession
GDP per person is likely to fall in 2012 and will not return to pre-recession levels until 2016, the TUC says today, ahead of the Office for National Statistics’ (ONS) first estimate of economic growth in the last quarter of 2011.
In November the Office for Budget Responsibility (OBR) predicted GDP growth of 0.7 per cent in 2012. But with the UK population set to grow by 0.8 per cent this year, GDP per capita growth – economic growth that takes account of population change – could fall for the first time since 2009.
With many economists forecasting that GDP contracted in the last quarter of 2011 and grew by just 0.8 per cent over the whole of the year – figures that the ONS will publish later this morning – it is likely that GDP per person did not grow in 2011 as well, says the TUC.
If the OBR economic growth and ONS population growth forecasts are correct, GDP per capita is not set to return to its 2007 level of £23,744 per person until 2016, says the TUC.
GDP per capita growth is a crucial economic indicator because it takes account of population growth and whether the economy can create jobs at a fast enough rate to reduce unemployment in a growing labour market, says the TUC.
If the economy is growing no quicker than the size of its workforce, it will struggle to tackle the high levels of joblessness the UK is currently facing, says the TUC.
The TUC is urging the government to make better use of low interest rates to boost public investment and to create incentives for firms to use their record corporate cash surpluses to increase investment in jobs and bring about wage-led growth.
The TUC believes the Chancellor’s rigid focus on austerity is causing entrenched mass unemployment, failing to tackle the deficit and damaging the UK’s future economic prospects.
TUC general secretary Brendan Barber said: “Everyone is desperate for an economic recovery – it’s the only way to create more jobs, higher wages and greater tax revenues to help pay off the deficit.
“But the government’s ill-advised austerity plan killed off hopes of decent growth last year, and the new European-wide austerity experiment looks to set to hold back economies this year too. If the UK doesn’t change course it looks like population growth, rather than higher consumer spending or business confidence, is the only thing capable of expanding the economy.
“As the Chancellor approaches one of the most crucial budgets in recent years, he should acknowledge that the dire state of the UK economy requires the government to invest in jobs and to encourage profitable businesses to help stimulate our economy with their growing cash reserves.”
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