Leaders: General election | Taxi for indyref chat

Statistics on the economy, which Chancellor George Osborne likes to trumpet, show that it is growing again, and more strongly than anyone dared to hope.

Chancellor George Osborne visits Begbrooke Science Park in Oxfordshire. Picture: PA
Chancellor George Osborne visits Begbrooke Science Park in Oxfordshire. Picture: PA

Figures on household economies, however, tell a different story.

According to National Statistics, real wages, or take-home pay once the effects of inflation have been factored in, have fallen continuously by just over 2 per cent a year since 2010.

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Thus for many families, it feels like the recession is not over at all, indeed it may feel more like a depression. These figures are important, for the feels-like factor may well determine the outcome of the next general election. It may also have a bearing on the independence referendum.

The National Statistics numbers go a long way to cast light on what has been a bit of a mystery – that the recovery has not been following the standard script.

Conventional economic wisdom says that a recession causes a sharp rise in unemployment and recovery then forces almost as quick a drop in jobless numbers. The 2008-9 recession, however, did not see as much of a rise in unemployment as its severity indicated. And the recovery has been marked by a much bigger increase in employment than seemed plausible.

The path of wages provides some of the answer as it appears that many employers, rather than sack workers during the recession, kept them on but with reduced pay and hours.

And perhaps hedging their bets that the recovery may not endure, they have raised output by using more part-time and contract workers.

This allows the government to boast about rising output and employment numbers, but gives it another problem.

When many people see bragging ministers, they contrast that with their own incomes which may have risen in cash terms, but not by enough to keep pace with rising food, fuel, energy, and other household bills. They 
then may conclude that the government is completely out of touch. Labour has latched on to that as the key to winning back power, though quite how credible the party is since it failed to steer the economy away from the financial rocks which caused the economic crash remains to be seen.

The Conservatives, by harping on about Labour’s responsibility, clearly hope that it will be non-credible by polling day.

All this must be pleasing material for Alex Salmond. Between a UK government perceived to be out-of-touch and an opposition seen as incredible, is a good position for him to make his Yes vote pitch.

And there may be more statistical trouble for the government to come. A rise in interest rates looks likely to come before the 2015 general election, which will mean increased mortgage and personal loan costs.

And as the Institute for Fiscal Studies reckons that real household incomes won’t recover to pre-crisis levels until after the election, the government’s woes are a long way from over.

Taxi for referendum chat

‘I HAD that Yes Scotland bloke in the front of my cab the other day.”

“What, you mean Alex Salmond has taken up driving taxis now? Well, I suppose he doesn’t get paid as much as a banker and from what I’ve been reading in the papers, he may have to pay up for the golf trip to the States, so good on him, a bit of moonlighting, we all do it.”

“No, no, it was just a regular cabbie, except that he kept whacking on about how I should vote for independence, that it would be great for everyone, we’d all be wealthy, and all that sort of stuff.”

“Makes a change from football, or the weather, or other bloody stupid drivers, or cycle lanes, or idiot pedestrians, doesn’t it? What’d you prefer, religion?”

“Fair point, except all you get on the telly and radio these days is indy this and indy that and, frankly, I’m just not indy it at all. I’m just keeping my head down trying to earn a living, which is hard enough, know what I mean?”

“Aw, come on, it’s the biggest decision you’ll ever get a chance to vote on, you must be interested in it.”

“Sure, when it comes closer to the vote, I’ll take an interest, but when it comes to taking advice on it, I don’t think that a guy who has just spent five minutes cursing a white van man who has had the nerve to overtake him is top of my list.”

“I see your point, by the way, have you lost weight?”

“Sure have, after that taxi ride, I’m walking everywhere.”