For richer, for poorer (but mostly poorer)

6 Dec

George Osborne claims that the UK economy is recovering and experiencing strong growth, thanks to the austerity policies pursued by the Coalition government since 2010.

But ordinary people can’t see any recovery at all. For them, all they see are stagnant wages and rising prices. There is a cost of living crisis.

Look at Newham. The table below shows the average (median) income for full-time workers living in the borough between the start of the financial crisis in 2008 and 2012.

2008 2009 2010 2011 2012
Avg Income £25,521 £26,154 £26,998 £26,489 £26,666
Annual % Change 2.48% 3.23% -1.89% 0.67%
Overall 4.49%

In 2011 average income actually fell for Newham workers. And the overall increase across the 5 years has failed to keep up with prices. So people – even “hardworking people” in full-time jobs – are getting poorer.

The table below shows the annual change in the Consumer Prices Index (CPI), which is the government’s preferred measure of inflation. It also shows what would have happened to average incomes in Newham if they had keep pace:

Annual CPI 3.60% 2.20% 3.30% 4.50% 2.70%
Avg Income £25,521 £26,440 £27,021 £27,913 £29,169
Difference -£286 -£23 -£1,424 -£2,503
Cumulative -£4,237

Over five years Newham people have lost out on over £4,200 of income. For a city banker or a hedge fund manager that’s just a rounding error on their bonus. But for ordinary people it’s the difference between keeping the heating on during a cold snap or not; the difference between the whole family eating dinner, or just the kids.

This is recovery for the rich – the rest of us are still stuck in the recession. And George Osborne doesn’t care.

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