The government's economic blunderbuss

A highly significant release has come today from the Office for National Statistics, one that has as much political significance as it does economic. “On an output per hour basis,” says the release in its customary dry language, “UK labour productivity increased by 0.3 per cent in the fourth quarter of 2013 to a level that was 0.7 per cent higher than a year ago.”

This rise in productivity is of the utmost significance. Rising productivity will cause wages to rise, which in turn will lead to improvements in living standards. This trend is a substantial problem for Ed Miliband. A Labour MP told the Prospector recently that Ed and his inner coterie had always assumed that the economy was going to collapse under the Coalition: that austerity would choke off the recovery and recession would follow. When this failed to happen, Labour switched from targeting austerity to focusing on, what they termed, “the cost of living crisis.”

But rising productivity suggests that this line of argument may soon be lost to Miliband and if the problem of stagnating wages begins to recede, he will be left with an ever-decreasing patch of ground on which to operate. The one line of attack that will be left to Ed and which he may chose to deploy will be potentially his most aggressive and risky—inequality. It is an approach with much to recommend it, and which would have substantial ideological attractions for Ed.

However, wheeling out the great British class divide as a political tool has caused problems in the past. When Gordon Brown attacked Cameron’s economic plans for being made “on the playing fields of Eton,” the effect was to make Brown look sour and aggressive.

So the economic arguments are starting to desert Ed. The question is whether he can develop a narrative to counter the Government’s blunderbuss assertion that: Labour broke the economy, this government fixed it. Today’s productivity figures will only serve to make the development of such a narrative that little big harder.