THE UK economy grew by 0.8% in the second quarter of 2014, official figures are said to show.
The figures, from the Office for National Statistics (ONS), show the economy is now 0.2% ahead of its pre-crisis peak, which was reached in the first quarter of 2008, as the great banking crash was erupting, with the collapse of the sub-prime mortgage market in the USA.
The ONS said the economy had grown 3.1% since the second quarter of last year. Chancellor George Osborne commented: ‘Thanks to the hard work of the British people, today we reach a major milestone in our long-term economic plan.’
The contribution of shoppers – on the business end of the huge price rises in basic household commodities – to the recovery ‘remains immense’ according to the official terminology. The retail trade made the biggest contribution to the latest quarter’s services surge, fuelled by more and more borrowing from banks and the legion of legal loan shark lenders, that now infest every high street in the country.
The UK’s service sector is the only part of the UK economy that has passed its previous 2008 peak. This sector because of the collapse of the major basic industries, now accounts for 80% of the UK capitalist economy!
Decisive sectors of the capitalist economy, including construction, industrial production and manufacturing, have yet to reach the levels reached in 2008 just before the crash.
That the UK economy is forecast to be the fastest growing among the G7 developed nations, according to the International Monetary Fund (IMF), is a barometer of the depth of the world capitalist crisis.
As massive borrowing from all sources fuels household shopping, output per head is not expected to reach its pre-crisis level until 2017. The so called record rises in employment have not resulted in an increase in the productivity of labour which is at its lowest point for generations.
Other countries recovered the output lost in the crisis much earlier than the UK. Germany regained its peak in 2010, with the US and France following a year later. In fact, GDP per capita is 5.5% down in the first quarter of 2014 from the same point in 2008. Britain is lagging behind France, Germany, Japan and the US and is nowhere near where it was in 2008.
Inflation is still slashing wages, which means people are getting much poorer in real terms, and deeper in debt, and more dependent on the ‘Food Bank’ economy. Pay is down 8% since May 2010.
Despite Osborne’s Budget Statement that he wants businesses to export more, the OBR (Office for Budget Responsibility) predicts that the UK’s exports will still fail to make a net contribution to the country’s growth.
It said: ‘Net trade is expected to make little contribution to growth over the remainder of the forecast period, reflecting the weakness of export market growth and a gradual decline in export market share.’
The OBR predicts that household debt is set to be even bigger than expected as workers’ pay packets get smaller.
Last November, the Office for National Statistics found that the coalition had borrowed £430.072 billion since it took over, whereas the last Labour government borrowed just £429.975 billion.
The ONS concluded that the country was ‘becoming increasingly dependent on inflows of foreign capital’. Osborne’s achievement has been to slash wages and benefits to the point where there is a Grand Canyon between the richest and the poorest.
The trade union bureaucracy has allowed him to promote zero-hours contracts, and impose them on sections of the workers, promoting a defeatist every-man-for-himself policy. However, the working class is far from defeated and having slashed wages, the great class struggles are beginning to erupt as the bosses seek to drive up productivity, privatise the NHS, and cut wages further.
In September the Young Socialists are organising a National March for Jobs for Youth, to the TUC Congress in Liverpool. They insist that the TUC must call a general strike to bring down the Tory-led coalition and bring in a workers’ government as the only way to get jobs for youth and save the NHS. Make sure that you give your full support!
