13 January 2011

After the recession, the real pain begins, New Statesman

Fuel price protests rattled Blair. The 10p tax row dogged Brown. Is David Cameron ready for the storm that his huge raid on our personal finances is about to unleash? writes Gavin Kelly in the New Statesman.

Economic narratives take shape like stalactites: the drip, drip of daily headlines deposits its wisdom and, before you know it, there's a solid consensus. For the recent recession, that consensus runs something like this: things were much worse than expected in the financial system but far better than predicted in the real economy - particularly in terms of the fallout in unemployment and home repossessions.

Now, the thinking goes, we are on a tentative path to recovery but we need to watch the growth figures carefully. Some still predict a double dip; most do not. But the key framing questions for 2011 are broadly accepted - will growth pick up, and can a resurgent private sector create jobs as fast as they are being destroyed in the public sector? Will the gamble pay off?

Behind that account, however, lies another story. It is one that is increasingly at odds with the impression given by headline GDP numbers and, critically, with the coalition's "on the mend" narrative. It focuses not on GDP, or the headline figures, but on the living standards of a swath of our working population on low to middle incomes. It is a story not of riding high in the boom years and then falling, only to bounce back quickly and thrive in the years ahead, but one of prolonged squeeze - a tale of growth without gain.

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