Yesterday’s talk was focused on the recent figures showing that the UK economy grew by 1.9% last year, the strongest it’s been since 2007, with critics arguing that it was ‘the wrong kind of growth’ or that these figures were only part of the picture.
The critics do have a basis for their argument: growth in GDP was down 0.7% from 0.8% in the last quarter of 2013 while the growth figures themselves would not have been much to celebrate pre-2008. However, the government believes that improvements will follow, and that the growth in the economy is the necessary first step to recovery in all areas.
One of these areas is the all-important ‘standard of living’ of the general public, which, it is argued, is not improving due to energy and food costs and the absence of significant – or any – pay rises over the last few years, whether for private or public sector workers.
In order for wages to rise, it is likely that unemployment figures will need to drop further and that employees will be able to feel once again that they have opportunities outside their own job. Employers, many themselves still under financial pressure, will not necessarily increase wages unless they feel that they may lose their employees or fail to recruit the best, where there are better offers elsewhere. This kind of ‘cost-of-living’ recovery may take longer to achieve.
The Chancellor George Osborne said yesterday that 450,000 jobs were created last year in the UK, and he is urging companies to ‘reshore’ – i.e. bring their manufacturing/outsourcing back to the UK if they have taken it overseas in the past.
Significantly, the construction sector was one of those that fell at the end of last year, despite a recovery having been seen in the housing market. It is possible that when this sector shows greater recovery, it could have quite an effect on the economy’s figures as a whole. It was the healthy services sector at the end of last year that boosted the figures the Chancellor is relying on.
In all, the figures are positive for the UK and the predictions of better figures for this year will no doubt keep the confidence of investors in the UK high and draw new investment in.
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