Today’s GDP figures look good on an annual basis, but they hide a slowdown in the last two quarters that starts to look like a trend.
GDP, grew 0.5% in the fourth quarter of the year, compared with 0.7% in the third and a recent peak of 0.8% in the second. A big concern is that growth is being driven by retail and consumer spending - not the balanced recovery that is really needed. Manufacturing and investment is petering out.
As the TUC has pointed out today, the Treasury has fallen back on that old statistical trick of recalibrating its data back to 2014, rather than the much less favourable 2010, when the ConDems took over. The UK now languishes well down the OECD growth league table. We should also not forget that this is the slowest recovery in history.
Many have argued that Britain's economy before the 2008 crash was too reliant on debt-fuelled consumer spending. We know from the OBR analysis of the Chancellor’s Autumn Statement that he is relying on households going heavily into debt to drive his economic recovery. When what Britain really needs is a pay rise.
Shadow chancellor Ed Balls said the slowdown in fourth-quarter growth was a concern, and that, "Tory claims that the economy is fixed will ring hollow with working people" whose "wages are down by £1,600 a year since 2010". Indeed!
The fall in gas and petrol prices will help the inflation figures, but unless wages increase this will provide only a temporary fillip and not the sustainable growth we need. It could also provide a further knock to our unsustainably large current account deficit.
The other question we should ask is who has paid most for the recovery? The JRF and others have published the final papers in a series of detailed academic reports that show how poorer and vulnerable groups have been disproportionately hurt by austerity economics. Tax credits and cash benefits took more away from those in the bottom half of the income spectrum than they gained from increases to tax allowances. Savings made from rebalancing of benefits and tax allowances were wiped out by cuts in income tax for the better off.
As this chart shows the changes to direct taxes and benefits have had no real effect overall on the public finances. Almost all of the savings achieved by cutting benefits were offset by gains for richer groups.
It is also interesting to look at the impact on different groups. As this chart shows pensioners have been protected (because they vote?), while the working poor, and latterly children, have suffered more.
Overall, while there may be a limited recovery for some, even that is faltering, and it is workers and the vulnerable who continue to pay the price.