The economy has gone precisely nowhere in 5 years, but at considerable cost

oldrightie

The next stage of this recessionaery cycle will be massive inflation. The casualties will be many and as ever the least deserving. Savers, elderly pensioners and jobs be savaged. Of course there is every chance Labour will heap the blame on a Tory Government. God willing people will remember where this legacy will have come from.

Alex

As a result of the depreciation in sterling, in dollar terms, our living standards have declined considerably.

Moraymint

" ... for probably the first time in modern British history, living standards have failed to rise for almost the entire duration of a Parliament ..."

Meaning that the Labour Party's plan for government finally came good - and Marxism took hold with a vengeance.

Shame that the nation has been trashed and we'll now waste the lives of a generation trying to get our house back in order - if we're lucky.

We might have got away with such recovery after, say, WWII - but this time our children will not have the benefits of "limitless" cheap energy (oil) with which to fuel economic growth and all the wonders that go with it.

Without wishing to put too fine a point on it, there's a real chance that we're about to enter a new dark age (literally perhaps looking at the UK's future energy plans and [complete lack of] energy security).

Let's hope the Tories have a Secret Plan for leading us through the next few years. If they don't, it could be time to invest in 'Grow Your Own Veg for Dummies'.

True Bred Pomponian

I think you'll find that public sector living standards have done fine.

the shade of dr kelly

"When the sheer magnitude of the economic disaster created here becomes fully understood by the electorate – and it’s implications for living standards and the ability of Britain to invest in it’s future – politics will be fundamentally changed in this country for at least a generation."

it is very sweet of you to think that the general public will ever understand given the reporting of the bbc in its entirety as well as the general lack of interest they have in finding out for themselves.

IF, and it is a massive IF, they ever found out/realised then there would be a revolution.

AndyinBrum

Call me completely Daft, but I don't remember life in 2005 being that bad, the Ashes win was good

edwardian

As much as I would like to believe "politics will be fundamentally changed in this country for at least a generation" we know there is a vast majority of people who will always vote Labour even if they broke into homes, stealing the first-born and violating animals at the same time.

the distressing point is the inability of these key messages about how monumentally the government has ruined the economy, and the economic future for a generation, getting out to the people whose vote matters - not those who have already made their minds' up because they are politically savvy/blinkered.

I hate Gordon Brown with a passion, he has brought this country to it's knees through his authoritarian manner and his delusion that he was destined to be PM. hell, he even makes Blair look good and made me feel sorry for him in the manner in which he ousted him. It is all about him, then the party and sod the country. Sod the poor beggars who are going to have to pay for this incompetence whilst he claims his tax-funded pension.

I don’t have the answer, if the Tories point it out it's shouted down - and when a government controls the media, they shout louder and longer - and it becomes futile. I'm sick of the government who, drunk with power, are able to flood the airwaves with their propaganda whilst brandishing any opposing voice as “extreme” or “inexperienced.”

I’m sick of hearing “it’s the right thing to do” and they’re “getting on with the job of government.” Funny how you never hear him say that “he’s listening” anymore. Because if he was listening, he would hear that the vast majority of the country hates him and wants him to stop doing his “job.” He’s tried; he’s failed; now he can leave me alone.

Marcher Baron

It's all very well posting such damning graphs here; readers are mostly well informed and reasonably (economically) literate. Who is going to put this information in terms that Motorway Man can understand?

Jonathan_T

Mark - very good post - thanks for this simple, yet powerful analysis.

The Tories could surely use this in a poster along the lines of;

"Since 2005 - no growth, national debt doubled (and rising). Thanks Gordon..."

Moraymint

... and yes, the shameful fact is that so few of our fellow countrymen understand the nature, scope and scale of this Labour government's gross incompetence and its utterly appalling legacy to the nation.

Why is that? Has our education system failed to teach people to be curious about, and interested in the world around them (not least the circumstances of their own country)? Has our media failed to describe, analyse and explain the situation effectively? Has the government been guilty of shameless propaganda for its own ends? Has the BBC failed? All of the above?

Or is it simply that most of us only take an interest in the world around us when it affects the pound in our pocket (as one infamous politician once said)?

If it is indeed the latter, then this year we could see the practical (and perhaps unsettling and unsavoury) implications of hundreds of thousands, if not a few million citizens suddenly discovering that their own cash and credit has run out - including the cash previously provided to them by the government aka the nation's rapidly dwindling cohort of taxpayers.

I think the recession (depression?) commences in earnest around about June of this year.

Kinglear

Think of all that cash as going towards creating a client estate for Labour, who are paid for by the wage earners who are left with nothing - not even a decent pension.
These people will never notice that we have all been robbed, as they will continue to get free everything, whilst our household bills spiral, our wages remain static, and our taxes rise.
Hell mend them.

Chuck Unsworth

"When the sheer magnitude of the economic disaster created here becomes fully understood by the electorate"

Aye, there's the rub.

HJ

"The economy is basically the same size as at the time of the last election. This means for probably the first time in modern British history, living standards have failed to rise for almost the entire duration of a Parliament."

It's worse than that. GDP hasn't grown but we have a substantially larger population than in 2005, so living standards must have fallen.

2trueblue

Liebore got in the last time because people were not interested in reality. They were too comfortable to think that being able to borrow to fund their higher standard of living they felt entitled to, because of the property boom.
The amount of money being pumped into the system is an mild anaesthetic to the pain and only when it is withdrawn will the real effect be felt. For a lot of people still in employment and with a mortgage, they are still better off, so they are unconcerned. The real rate of inflation is personal and people do change their spending in response the price hikes if possible.
Now that the sales are over, Christmas is gone and the bills roll in, so will reality. By the time the election is held it will be to late to effect change in their immediate voting patterns. Who ever gets in has to begin the fixing process and that will take more than one term. With 8 million people of working age economically inactive that is a tall order.
Liebore have made no dent in the true figures over 13 yrs, despite the boom. They have stripped the core population of their freedom, aspiration, culture, and mortgaged us into oblivion. They have done nothing to unite the population, rather they have divided us and put more children into poverty in their terms in office, all for their own vanity. They have become celebrities who continually deliver the lines and forget that this is not reality tv, it is our reality and they have destroyed it. Their biggest sin has been not to deliver the goods.

oldtimer

Your two charts destroy, absolutely, the Brown and co claim that spending by the government promotes growth.

Rhoda Klapp

Wanna try this with GDP/capita, if it is living standards you are talking about?

Scary Biscuits

I'm not sure about some of these statistics here. I mean, I think you're being too kind to Brown.

Presumably these GDP figures are before inflation. Therefore, 0.1% growth with inflation at 3% means real shrinkage of 2.9%. If you measure our GDP independently of sterling, the it's even worse, e.g. -30% (yes minus thirty per cent) in US dollars.

Thus, Mark's comment the economy is basically the same size as five years ago is way off-beam.

Tiberius

Does anyone have an opinion on whether Brown understands just what he's done to the country?

michael m

"Brown's bankrupted Britain"
The slogan that should be rammed home to the electorate at every opportunity.

TrevorsDen

Tiberius - Brown is living in his own dreamworld.

Morymint makes a good point. Commodity prices are much higher relatively now than after WW2. At least I presume even allowing for inflation oil prices were cheaper back in '45. But also we had huge supplies of home-grown coal.

We did slowly pay back debt after WW2, so it can be done. But let us not forget the austerity that went with it. I would argue that life was not that much different in 1959 than 1939.

The feeling in my waters tell me that 1Q-10 may well be less than 4Q-09 !

I do think its pointless asking the Conservatives what their economic policy might be if elected.
The fact is the predictions from the govt really belong in the works of Hans Christian Anderson. Any govt coming to power will have to tear up any preconceptions.

EyeSee

Seems to me there is a close similarity between the cost of the recessionary crisis (bank bailouts etc) and the amount of money Brown chucked down a drain he labelled 'investment'. Hospitals, worse and by some margin (they are now fairly efficient killing machines), OAP's worse off, crime -much worse (unless you are a criminal), local and national taxation -much higher, schools -incredibly worse results and subject to sustained lying and fiddling to hide the truth. So GDP may have struggled to be the same as 5 years ago, but by God the people doing the work ae less well served and more financially harmed than 5 years ago, even ten years ago.

Tapestry

Can you explain something? The quarterly GDP figures add up to £1.27 trillion calendar 2009. Why is the government using £1.41 trillion as its GDP figure to make borrowing of £740 billion into 52.5% of GDP?

Are the quarterly figures adjusted so very much - by 10%?

GDP in 2008 was often quoted to be £1.48 trillion, but taking the four quarters it seems more like £1.35 trillion - again the annual figure adds about 10% to the quarterlies.

What is going on?

Short the UK

Quote of the year, so far:

"The UK is a must to avoid. Its Gilts are resting on a bed of nitroglycerine."

Bill "the bond king" Gross

Dorothy Wilson

Tiberius: No he does not understand what he's done to the country. The following is a snapshot of his personality profile. I've posted this before but it bears repeating.

"He will follow his ideas …… inwards and not outwards. Intensity is his aim, not extensity.

In the pursuit of his ideas he is generally stubborn, headstrong, and quite unamenable to influence.

However clear to him the inner structure of his thoughts, he is not the least clear how they link up to the world of reality.

In his personal relations he is taciturn or else throws himself on people who cannot understand him, and for him this is one more proof of the abysmal stupidity of man.

The counterbalancing functions of feeling, intuition and sensation are comparatively unconscious and inferior."

In most people, as they move towards maturity, those counterbalancing influences are supposed to develop. Unfortunately, that seems to not to have happened with Brown. In other words, he lives according to his own idea of the world and nothing will shift him from that. A simpler way of putting it is that he is just deluded.

Henry Curteis

the quarterly figures do not translate into the annual figure. The reason is that they are fixed at 2005 pricing. You need to add inflation to 2009 from 2005, which is about 10%. Very confusing.

Mark M

Tapestry @4:26pm

I think it's to do with inflation. You probably need to inflate the GDP figures (which are reported at 2005 prices) using the GDP deflator indices.

This is why government spending is forecast to be frozen in real terms even though the cash amounts are £716bn in 2011-12 and £776bn in 2014-15.

Boudicca

Unless you find a way of explaining the appalling economic situation Brown has created so that readers of The Sun understand it there will be no fundamental change.

Labour will continue to lie and its licence-fee funded Propaganda arm the BBC will continue to allow them to get away with it.

If the Tories win the next election and start tackling the deficit and trying to change the welfare-dependency culture, the bleeding-heart socialists at the BBC will ensure they are blamed - not Labour, the real perpetrators.

John Moss

@markM

That £60bn increase is where we should start. We should fix £716bn per annum as the base case and not increase the cash spend figure for 5 years. Changes and programme deletions will/should reduce this further.

Leave it to the Departments to find the savings - no pay rises, pay cuts for the highest paid, "efficiency", they can manage that, but they will only do it if you don't give them the money to waste in the first place!

TGF UKIP

"One picture is worth a thousand words" so no good Dave or Boy George waffling away and voters not taking a blind bit of notice but think what a powerful poster a graph of UK Government Debt would make from 1997 to present, or better still with HM Treasury projections to 2013/14 and £1.4 trillion.
Caption could simply be "Where 12 years of Labour Government have landed Britain" or better still "What 12 years of Labour Government have lumbered the Britsh people with"

Much too simple and non-subliminal enough though for the Mekon who will no doubt stick with that dagger to Gordon's heart "Vote Blue, Go Green".

Mark M

@John Moss

I couldn't agree more. Until tax receipts start to match up with expenditure there is no case for real-terms increases in budgets. By my calcs, it will take 8 years of real-terms freezes (i.e. inflation matching increases) for receipts to catch up to TME and get to a surplus. Cash terms freezes will reduce this, meaning that public sector expenditure can begin to rise (if that is what is wanted) sooner.

stephen

What a complete mess! But who would expect otherwise from Brown,Balls & Co.
Boy George still does not seem to be able land the punches on Darling. Hamo is doing better on Newsnight.
Should not our Dave consider hiring the Ad Agency who did iconic VW commercial-remember this is the man who started betting red on the tables just as they turned to black etc.sex kittens etc!
Brown has .
had a lot of such moments e.g
Selling our gold at the botom of the market
Abolishing Boom Bust
Saying UK would be early out of recession
I could go on
surely Dave should be more ahead in the opinion polls with this sort of storyline?

YA

having zero knowledge of economy, I judge the situation by job market structure. It's hysterical mess of non-jobs for all types of corporate degenerates - telephone bullies, recruiters of recruiters, agents, bankers, brokers, retailers, owners, managers, distributors, "analysts", buyers, supervisors, salesmen, and so on. Nobody neither wants nor is capable neither to work nor to think, to do something practical or meaningful. The nation of office rats - does this public deserve decent standards of living? When everything is designed in USA, France and Germany, and made in China, should one expect something different from economic decline? Just wondering, naively.

Martin C

You simply cannot say the economy is back where it was in 2005, that is wrong. Back in 2005 we didnt have this PSBR of (if you believe Darling) 12% but more like 18% of GDP.

You must SUBTRACT the amount of borrowing that is currently taking place from the size of our economy, to arrive at the true value of our economy i.e. the value of what we really produce.

And if you do that you will see we are not were we were in 2005, we are actually back where we were in 1997.