Recovery? What recovery?

by Luke James

Unions reminded backslapping Tory leaders today that Britain is in the grip of the worst economic crisis in a century despite 0.6 per cent growth in the last quarter.

Tiny boosts in construction and manufacturing sector were partly behind the slight respite for the battered economy.

Smug PM David Cameron claimed on Twitter that the figures showed Britain is "on the right track" and insisted his government is "building an economy for hardworking people."

Tory Chancellor George Osborne said Britain's gross domestic product (GDP) was "better than forecast" but failed to mention that it is still 3.3 per cent below pre-recession levels.

TUC leader Frances O'Grady reminded the pair that the economy has grown half as much as they boasted it would when they cobbled together the Con-Dem coalition in 2010.

"It's a measure of how poor the economy is faring that this level of growth is being welcomed," she said.

"With workers in the midst of the longest wage squeeze since the 1870s and unemployment still over 2.5 million, it certainly doesn't feel like a recovery to many people."

Labour shadow chancellor Ed Balls pointed out "this is also the slowest recovery for over 100 years" despite the fractional shift forwards.

He said Britain would need to seal 1.3 per cent growth every quarter for the next two years "simply to catch up all the ground we have lost under David Cameron and George Osborne."

Overall output in construction and manufacturing remains more than 10 per cent below pre-recession levels despite progress in the last quarter.

Manufacturing recovered by 0.4 per cent after slumping consecutively for the last six quarters and the 0.9 per cent rise in construction is eclipsed by the 1.8 per cent fall in the first quarter.

Construction union Ucatt labelled the figures "disappointing" and general secretary Steve Murphy reissued his call for "urgent" investment in infrastructure projects and social housing.

There was also a 0.6 per cent growth in the service sector but concerns were raised that companies are hoarding billions of pounds that could be invested to spark real growth.

Left Economics Advisory Panel co-ordinator Andrew Fisher said privateers have amassed the surplus, equal to 6 or 7 per cent of GDP, thanks to successive cuts to corporation tax and by slashing workers' wages.

"Companies are quite logically refusing to invest substantially in new products, services or jobs at a time when consumer demand is depressed by falling living standards," he said.

This article first appeared in the Morning Star

Tory home loan bribes 'unwise'

 
by Richard Bagley

Tory Chancellor George Osborne revealed his latest desperate "big idea" for housing today that will see more of our cash used to bribe banks into lending to people who can scrape together a mortgage deposit.

He plans to gamble £12 billion on high-risk 95 per cent loans where the state will act as a guarantor.

That means we will pick up the tab for some of the loss in case of a default.

Mr Osborne claimed following talks with construction firms that the extension of the Help to Buy scheme was "about getting behind those who aspire to own a home."

It will cover houses priced up to £600,000 and will only help those wealthy enough to save a 5 per cent deposit.

With average house prices at around £150,000 in Scotland and Wales - rising to a whopping £454,000 in London - people in the two nations would need at least £7,500 in cash to qualify for the mortgages or over £22,000 in the English capital.

The government's obsession with fuelling the housing market even drew criticism from Bank of England chief Paul Tucker.

He described the scheme as "unwise" in the long term because of fears that it will help reinflate a housing bubble that has left hundreds of thousands packed into expensive private rented accommodation.

Construction union Ucatt general secretary Steve Murphy accused Mr Osborne of "fiddling round the edges of the housing crisis.

"If the government wants to begin to solve both issues then they need to be investing and building social housing which will get skilled workers back to work and will also provide homes for the millions of people who are currently in ina
dequate accommodation."

Left Economics Advisory Panel co-ordinator Andrew Fisher ridiculed the Chancellor's announcement.

"After three years of economic failure, Osborne's great new strategy for growth is a house price bubble," said Mr Fisher.

"The Help to Buy Scheme is an admission of political failure and of the continuing fragility of UK banks.

"This is nationalising the risk and privatising the profits again - a bank bailout by stealth."
He added: "The solution is not subsidies for the big construction companies instead of the banks, but for councils to borrow and build to meet local need."

This article appears in today's Morning Star