GDP per person set to decline in 2012

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date: 24 January 2012

embargo: 00.01hrs Wednesday 25 January 2012

GDP per person is likely to fall in 2012 and will not return to pre-recession levels until 2016, the TUC says today (Wednesday) 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.'

NOTES TO EDITORS:

GDP per capita growth, 2000-2010

Year

Population (000s)

GDP (2008 prices)

GDP per capita (£)

GDP per capita growth, per cent

2000

58,886

1,185,305

20,129

4.1

2001

59,114

1,222,650

20,683

2.8

2002

59,319

1,255,142

21,159

2.3

2003

59,552

1,299,381

21,819

3.1

2004

59,842

1,337,782

22,355

2.5

2005

60,236

1,365,685

22,672

1.4

2006

60,584

1,401,290

23,130

2.0

2007

60,986

1,449,861

23,774

2.8

2008

61,398

1,433,871

23,354

-1.8

2009

61,792

1,371,163

22,190

-5.0

2010

62,262

1,399,850

22,483

1.3

GDP per capita growth forecast, 2011-2016

Year

Population (000s)

GDP (2008 prices)

GDP per capita (£)

GDP per capita growth, per cent

2011

62,760

1,412,449

22,506

0.1

2012

63,262

1,422,336

22,483

-0.1

2013

63,768

1,452,205

22,773

1.3

2014

64,278

1,491,414

23,202

1.9

2015

64,793

1,536,157

23,709

2.2

2016

65,311

1,582,242

24,226

2.2

Source: ONS population statistics and GDP data. Projections based OBR growth forecast, November 2011 and ONS population projection, October 2011

- All TUC press releases can be found at www.tuc.org.uk

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Gibson T: 020 7467 1337 M: 07900 910624 E: egibson@tuc.org.uk

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