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The TUC has today (Sunday) published a report outlining the challenges the UK faces from the government’s mishandling of Brexit, the damage from austerity and the global economic slowdown.

The TUC is calling for an urgent £25bn package to protect growth and strengthen public services.

Included in the report is new TUC analysis that reveals the extent to which austerity has held back the economy since the financial crisis, resulting in a slower recovery than from all recessions in the 20th Century.

Action needed alongside the Spring Statement

The TUC says the UK economy faces immediate risks that require urgent action before the autumn Budget.

Global growth is slowing down, with international trade disputes damaging business confidence and volatility in financial markets, which could further reduce private sector investment.

The government’s mishandling of Brexit is causing chaos. The prime minister’s failure to deliver a workable deal – and her refusal to rule out no deal – is harming confidence in the economy. Companies, including major manufacturing employers, are cutting investment and planning to move operations and jobs out of the UK. 

Austerity is compounding current risks. UK public services have been cut to the bone. Even after the Prime Minster claiming the ‘end of austerity’, spending on public services in 5 years’ time will still be £500 lower per person than in 2009/10.

In today’s report, which further details the risks Britain faces, the impacts of austerity, and the action needed in the Spring Statement, the TUC calls for the Chancellor to:

  • Increase funding for public services by an additional £15bn to provide material support to the economy and restore the health of vital public services. This will double the planned increase already set out in the Autumn Budget. As well as having direct benefits to communities damaged by austerity, it is a fast way to boost economic growth.
  • Increase capital spending by £10bn to bring the UK towards the OECD average for infrastructure investment (3.5% GDP). This should be targeted to those towns and communities that have been held back by austerity and years of under-investment.

TUC General Secretary Frances O’Grady said:

“Austerity didn’t mend the holes in the roof, it tore it down. And it’s left Britain in a far worse state to survive the challenges ahead.

“With the global economy slowing down and the Prime Minister’s mishandling of Brexit causing chaos, we cannot afford to delay the rebuilding that Britain needs. 

“Positive action is needed from the government to direct funds to the public services people depend on and rescue them from breaking point. And every part of Britain must get investment in the modern infrastructure needed for growth.”

Editors note

- TUC report: The full TUC report on the Spring Statement can be found here: https://www.tuc.org.uk/sites/default/files/springstatement2019.pdf

- Recession recoveries: The following table the rate of growth across the 9 years since the recession ended in 2009 compared to the 9 year periods following recessions in the 20th Century. The baseline for indexing is 100.

Recovery period

1908-1917

1921-1930

1931-1940

1947-1956

1975-1984

1981-1990

1991-2000

2009-2018

Index in 9th year

125.4

126.2

142.3

134.9

120.5

134.5

129.3

118.5

Average annual growth

2.6%

2.7%

4.0%

3.4%

2.1%

3.4%

2.9%

1.9%

Sources: Office for National Statistics, Bank of England, TUC analysis

- Impacts of austerity: Last year the TUC published the report Time for Change – the end of austerity, which detailed the impacts of austerity across public services, and the case for properly funding services.
https://www.tuc.org.uk/sites/default/files/Time%20for%20Change%20%20the%20end%20of%20austerity.pdf

A report by the Local Government Association has warned that by 2020 Local Authorities will have lost 60p from every £1 of government funding compared to 2010. Without future increases to local authority funding it will create an £8bn funding gap by 2025, which will lead to further cuts to services.
https://www.local.gov.uk/about/news/funding-black-hole

Education unions have warned that 91% of schools will lose out under the government’s funding plans, adding to school cuts of £2.8bn since 2015 that have led to the loss of thousands of teachers, teaching assistants and support staff, and an increase in class sizes.
https://schoolcuts.org.uk/about/

The NHS is emerging from an unprecedented decade of spending squeeze which saw average annual growth of just 1.1% in real terms, compared to an historic average of 3.7%. The government announced increased funding for the NHS in June 2018, saying that they would be spending £20bn more on the NHS by 2022/23. But the Institute for Fiscal Studies said that just to maintain current standards, the Department for Health requires annual average growth in resource budgets by 4.1% over the spending review period, or 5% if the NHS is to deliver the transformative change set out in the Five Year Forward View.
https://www.ifs.org.uk/uploads/publications/comms/R143.pdf

- About the TUC: The Trades Union Congress (TUC) exists to make the working world a better place for everyone. We bring together more than 5.5 million working people who make up our 49 member unions. We support unions to grow and thrive, and we stand up for everyone who works for a living.