Professor Özlem Onaran (Economist at the University of Greenwich), in a comment to the Centre for Labour Social Studies, writes:
The Autumn Statement paints a rosy picture of Britain as the strongest growing economy in the developed world, and the only causes of concern are in the global economy. What the Chancellor has not mentioned is that growth is once again built on the shaky ground of consumer debt, and the most important risks to the British economy are home-made rather than external. He celebrated that real earnings will grow for the next five years, but has not mentioned the forecast of the Office of Budget Responsibility that real earnings will not return to pre-crisis levels over the next five years after a continuous fall since the crisis. The Chancellor has also not admitted that pay freezes, low paid new jobs, low incomes of the involuntary self-employed are behind the rosy unemployment figures, and this is the reason why the tax revenues have not grown sufficiently, and public borrowing has increased despite draconian public spending cuts.
The budget deficit is the wrong policy target to begin with; Britain’s main deficit is the deficit in investment and equality. Neither cuts to public investment nor tax incentives to private businesses will help to cover the equality and investment deficit of Britain. A genuine sustainable development in Britain requires a public policy mix with two priorities: First, a massive programme of public investment in renewable energy, public transport, housing, child care, elderly care, health, and education, which will close both the investment and decent work deficit in Britain. Second, labour market policies to ensure that wages grow in line with the historical growth rate in productivity as well as inflation such that the loss of labour’s share in national income in the past decades is reversed, and the recovery is wage-led rather than debt-led. Our advice to any new government is to take care of full employment, decent pay for women and men, equality, and ecological sustainability, and the budget will take care of itself.