GDP growth figures have become the barometer of choice for commentators trying to tell the political weather – a good measure of how the public will eventually fall in the faceoff between Osborne and Balls. The story goes that a return to sustained growth will mean a return to rising living standards. That means a vindication of the government’s position, and a victory for the Chancellor.
As a simple story, that makes sense if the pressures now facing Britain’s households are straightforwardly growth-related – if, in other words, we’re in a post-recession hangover that will vanish when growth returns.
But there’s now mounting evidence of a deeper problem for living standards in the UK economy. Take the chart below. It shows long-term trends in UK median wages. It reveals that stagnant wages didn’t start with the 2008-09 recession, but began as far back as 2003, when GDP growth was still strong.