It's not the size of the economy that counts, it's what you do with itby Jay Elwes / December 12, 2013 / Leave a comment
Published in January 2014 issue of Prospect Magazine
“This could turn out to be the defining issue of the 2015 general election”: Many British people aren’t feeling the effects of recovery
© Dominic Lipinski/PA Wire/Press Association Images
In November, the OECD upgraded Britain’s growth forecast for 2014 to a robust 2.4 per cent. However, many people are not seeing that reflected in their pay packets (see Oliver Kamm, p44). In Britain, Labour has been quick to suggest that growth and wages, which have long kept pace with each other, have been “decoupled” and that a “cost of living crisis” is the result.
Not everyone agrees. The long relationship between wages, growth and productivity still holds according to Paul Johnson, Director of the Institute for Fiscal Studies: “The idea that remuneration of workers and productivity have somehow become separated has gained a lot of credence recently. Unfortunately the evidence for any such thing happening is rather scarce.”