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UK economy has fallen into relegation zone of OECD countries since 2017 election  

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​​​​​​​Despite burying most of today’s coming OBR forecast, the government cannot hide from the dismal performance of the economy on its watch – and that’s against the very low bar of the austerity decade.

TUC analysis issued today shows how badly the UK economy has performed since the 2017 general election against other advanced economies. 

  • UK average annual GDP growth (between 2017Q2 and 2019Q2) of 1.3 per cent was less than half the OECD average of 2.7 per cent
  • The UK GDP growth performance ranks 31 of 35 OECD countries.
  • On the back of an already dismal decade, this feeble UK growth is (also) less than half the long-term growth rate for Britain before the financial crisis (2.8%).

GDP growth annual %

GDP growth annual %
Source: OECD; Ireland growth is 8.3 per cent

More concerning even than this low ranking, is the bad state of UK investment and exports. UK investment fell at an annual average rate of -0.2% between Q2 2017 and Q2 2019.

  • This compares to average growth of +3.4% across the rest of the OECD, with the UK ranking in 30th place out of 35 OECD nations.
  • Once public and housing investment is stripped out, UK business investment was even weaker over the period, falling at an annual rate of -1.3%.

Investment annual growth, %

Investment annual growth, %
Source: OECD; Latvia is 11.9% and Hungary 17.5%.
  • Exports fell 2.1%, compared to 3.4% growth for other advanced nations, with the UK ranking second to last – 34th out of 35 OECD nations.
  • The devaluation of the pound following the referendum on EU membership was expected to strengthen exports by making UK goods more affordable. Instead, the reverse has happened.

Exports annual growth, %

Exports annual growth, %
Source: OECD; Ireland is 12.4%.

Workers pay the price

The dismal performance of the UK economy over the past two years comes on top of the severe hardship of the austerity decade.

Britain’s workforce is paying the price, not only of austerity since 2010, but also of the government’s poor management of the economy since 2017.

The prolonged weakness of GDP growth has resulted in the longest wage slump for two centuries, with the average weekly wage still worth £14 less than before the financial crisis.

Lack of investment and a decade of austerity have both played a part in holding back wage growth. And the government’s failure to give workers proper wage bargaining powers has kept the economy rigged against working class people.

TUC General Secretary Frances O’Grady said:

“The UK economy has fallen into the relegation zone – and you have to blame the manager. The current government is leaving the economy in a dismal state.

“When Britain needed to invest, they chose corporate tax cuts. And when Britain needed to rebuild, they chose more austerity.

“Next month’s election is a chance for change. Are we going to rebuild Britain? Or will workers be squeezed again while tax cuts are given to the rich.

“Leadership is about more than just looking after your wealthy mates. We need leaders who will take on the powers behind UK's rigged economy. And we need a plan for world-class public services, modern industry and decent jobs.”

Action needed

The TUC is calling on the next government to:

  • Rule out tax cuts for the rich – rebuilding our public services is far more important to a strong economy.
  • Deliver world class public services , with a ten-year funding plan to reverse the effects of a decade of cuts.
  • Raise public infrastructure investment to at least the OECD average – from the current level of 2.7% GDP to at least 3.5% GDP – to provide an additional £15bn annually to build a fairer and greener economy.
  • Establish a National Investment Bank , with a remit to target communities where decent jobs are most needed.
  • Invest in skills so that Britain has the advanced workforce needed for a just transition to a high-tech and net zero emissions economy.
  • Redesign Britain’s unfair labour market, with a new deal for workers, including an immediate £10 minimum wage, a ban on zero-hour contracts, a crack-down on exploitation by gig-economy employers.
Ban zero-hours contracts Too many workers are being denied job security, sick pay and holiday pay - and insecure work is out of control.