Leading economist Tim Morgan warns against any sense of complacency over Britain’s economic future despite the recent encouraging trends, in There is a Cost of Living Crisis published on Monday 29 September by the Centre for Policy Studies.
The Coalition has been criticised for the “cost of living crisis”. And it is true that between 2010 and 2013, average wages increased by 4.8 percent, significantly less than the 9.4 percent increase in the Consumer Price Index (CPI). But Tim Morgan shows that the “cost of living crisis” began under the previous Labour Government: from 2007 to 2010, average wages (+5.8 percent) grew by less than CPI inflation (+10 percent). Tim Morgan comments: “It would be disingenuous to blame this “cost of living crisis” on the Coalition, since the decline in real living standards clearly began earlier.
In addition, between 2000 and 2008, economic growth of 20 percent was purchased with greater levels of government debt whilst allowing public spending to soar to unaffordable levels. Between 2000 and 2008, expressed in real terms, non-public debt doubled, from £3.6 trillion to £7.2 trillion. Meanwhile public expenditures increased by 53 percent between 2000-01 and 2009-10. Morgan acknowledges that the Coalition has made welcome progress but more is needed: the number of people in work is at record levels; the UK is the fastest growing country in the G7, but growth is still over-dependent on higher levels of public and private debt; inflation and interest rates are low, but both the deficit, and now the current account deficit, remain far too high.
Tim Knox, Director of the Centre for Policy Studies, comments: The current deterioration in living standards is a clear consequence of Labour’s mismanagement of the economy. But if Ronald Reagan’s famous question – “Are you better off than you were four years ago” – were to be asked today, the answer for most people in Britain would be “No”. Coupled with the fragility of economic recovery, the Coalition must therefore resist the temptation to be complacent. Much more needs to be done.”
