The UK economy is doing better now than at any time in the last three years. Real GDP increased at an annual rate of 3 per cent in the middle two quarters of 2013, and forecasters have been forced to revise up their estimates for growth in 2013 and 2014. Likewise, employment growth has outstripped even the most optimistic projections.
However, this good news needs to be seen in context: we are experiencing the slowest recovery in living memory, GDP remains below its pre-recession peak, and if real GDP had continued to grow in line with its pre-recession trend it would now be some 15 per cent higher than it actually is - and we would all be substantially better off as a result.
This paper examines the basis of this nascent recovery, and finds that:
- the falling unemployment rate masks substantial growth in the scale of both long-term unemployment and underemployment, as well as falling productivity levels and real median wages
- the chancellor's promised 'march of the makers' has come to very little in terms of the manufacturing sector's investment and exports
- the help to buy scheme is inflating growth and creating a new housing bubble financed by household debt
- the UK has internationally low rates of investment, which reflects the persistent short-termism of the country's businesses, and is exacerbated by the dominance of the financial sector.
It concludes that it is time for the UK to adopt a new economic model - one that will deliver better lives for the majority of the population, not just an elite few.
Snakes and ladders: Tackling precarity in social security and employment supportAcross the country, people are trying to make ends meet, build financial security and pursue their aspirations. But, in a vicious cycle of snakes and ladders, many are being pulled down into poverty.
Making markets: The City's role in industrial strategyTo tackle climate change, we need a significant increase in public and private capital investment.
Broken hearted: A spotlight paper on cardiovascular diseaseProgress on cardiovascular disease was a significant driver of better health and prosperity in the latter half of the 20th century, however progress has recently stalled – with indications it may be in reverse.