As Larry Elliott has noted in the Guardian within the last hour, referring to statistics out this morning:
In the first three months of 2012, the real spending power of households fell by 0.6% because incomes did not keep pace with prices. That followed a drop of 0.8% in the final quarter of 2011 and a flat picture in the quarter before that. Real income per head in the first quarter of 2012 was 0.9% lower than in the same period of 2011 and at its lowest level since early 2005.
Britain, in other words, is two-thirds of its way through a lost decade of declining real incomes. And since real incomes are the main driving force behind consumer spending — which accounts for around two-thirds of GDP — you don't need to be Adam Smith or John Maynard Keynes to work out that the economy is going to struggle.
These figures are, however, generalities. I am sure they are true for most households. But for the top earning I doubt it very much. The following was said in an HMRC document recently:
The income share for the richest 1% of taxpayers rose by 0.5 percentage points between 2007-08 and 2009-10.
HMRC tried to claim this was due to tax avoidance in the last of those years. I doubt it. I think the trend will have continued. This is a recession for the poor, not the rich. And the rich are undoubtedly winning.
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Nice peice by Portes, 30 July 2012 ‘Which (macro)-economists are worth listening to?’.
I saw Portes on Andrew Neil’s show and Ed Vaizey gave him the usual Tory line ‘364 economists said in 1981 that…’, seemingly noy knowing that what they said in the Times was that the government and BoE would produce huge unemployment, which they did. ‘Lord Howe was right’ doesn’t fill me with confidence as an economic policy, which is pretty much what this Coaltion has left.
In 2006 Stefan Collini wrote a book called ‘Absent Minds’ about the way intellectuals make intellectual statements while saying they aren’t making intellectual statements: leading by seeming to follow. ‘Plan A till I die’ thinking is another one.