Second quarter (Q2) figures released today by the Office of National Statistics show GDP quarterly growth of 0.4%, up from 0.2% in Q1.
Annual growth is still only 1.3% - a miniscule 0.1 percentage point increase from 1.2% in Q1.
Looking at the bigger picture, workers have just lived through the most dismal decade on record for GDP growth.
With interest rates rising and wages continuing to stagnate, things just keep getting harder for workers in the UK.
And let’s not forget the very real risk crashing out of the EU without a deal in place, which would hit working people the hardest.
As Frances O Grady said today, “The latest figures cap a dismal decade for the economy. But we should not accept weak growth as the new normal – it’s the result of bad management of the economy. There has been too little investment and a failure to focus on getting wages rising”.
That’s why we’re calling on the government to reverse its austerity policies immediately and take urgent action to invest and support the economy.
The chart below compares recent outcomes with long run averages for quarterly and annual growth (these are 0.6% for the former and 2.5% for the latter, calculated from quarterly records that start in the 1950s).
From a demand point of view, the figures are unremarkable across the board.
There was only slight bounce-back in household spending to 0.3% in Q2 from 0.2% in Q1, as bad weather gave way to excitement around the royal wedding and World Cup.
Meanwhile, exports fell by 3.6%, recording their worse quarter for six years. Business investment rose a little (+0.5%) following a decline in the previous quarter (-0.4%) – but remains incredibly subdued.
And output figures show that manufacturing fell back into recession in the first half of 2018, with declines of 0.1% in Q1 and 0.9% in Q2.
The shortcomings of today’s figures are bad enough, but they pale into insignificance when we take a longer view.
Today’s Q2 figure completes a full decade since the global recession began in 2008Q2 (when quarterly GDP declined by 0.7 on the present estimate).
Over this decade (i.e. 2008Q2 to 2018Q2), GDP has grown by only 1.1% a year on average – far short of all other decades.
In fact, when we compare all decades from this point, growth in the decade to 2018Q2 was only half as strong as the previous weakest decade.
In per head terms (which more closely reflects individual experience) the story is even more catastrophic. GDP per head grew by an annual average of only 0.4% in the decade to 2018Q2, only a fifth as strong as the decade that was previously the weakest.
It should be noted that making such comparisons depends upon the starting point. Moving away from years ending in ‘8’, the only comparable episode was in the decade to 1983, which included both the OPEC recession of 1974/75 and the Thatcher recession of 1980.
Mercifully, we eventually found a way out back then, and this also came after a much longer period of high and sustained growth.
Mathematically the present decade is still the worse, with annual growth of 1.0% over 2018Q1 to 2008Q1 of 1.0% below 1.1% over 1973Q1-1983Q1. Moreover, on per head figures the low point for annual growth of 0.3% over 2008Q1-2018Q1 was vastly below the figure of 1.0% for 73-83.
After the most dismal decade on record, the hardships for workers keep piling up.
We now confront the very real threat of a cliff edge Brexit with interest rates on the rise.
At the very least the government must put an end to the failed austerity policies that play a big part in explaining why we are where we are.
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