Articles

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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Some of the spending review's big losers haven't realised it yet, The Guardian

The media may be preoccupied with cuts to child and housing benefits – but all hell will break loose once tax credit cuts bite, writes Gavin Kelly in The Guardian.

There is nothing quite like being in No 10 in the midst of a political storm: entering each day past a pool of journalists that swells in number as the dark clouds gather. The sense of siege is tangible, the momentum irresistible. Yet the media pack often miss the big story the first time around. At the time of the March 2007 budget, few anticipated the most portentous reform: the abolition of the 10p tax band. So, too, with October's spending review. Present incumbents of No 10 be warned: a real storm is headed your way, but not from the direction you expect.

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