Theresa May’s campaign relaunch has collapsed before it’s even begun. On 22 May, the Conservative leader told Andrew Neil that her uncosted manifesto depends upon delivering a “strong economy”.
But a volley of awful economic news has hit her government right before the relaunch:
- Average unsecured debt per household is set to hit £13,900 this year. Just under the record level before the financial crisis.
- Growth has slumped to just 0.2%, down from 0.7% in the final quarter of 2016.
- The deficit leapt to a three-year April high, at £10.4bn.
The gloomy economic figures make it increasingly difficult to reconcile May’s sloganeering with reality.
Crisis levels of household debt
There are two main ways to look at debt: public and private. On both counts, the Conservatives are piling it on. Office for Budget Responsibility (OBR) figures show that household debt will reach £13,900 this year, according to the TUC. That’s almost pre-crisis levels. The TUC has joined calls expressing concern about the Conservatives’ private debt-based economic strategy. On BBC Newsnight earlier in May, University College London (UCL) Professor Mariana Mazzucato said:
The Conservative economic policy has reduced how much we’re spending on education… Productivity continues to lag. The little increase in real incomes has gone all to over-60-year-olds… Personal debt to disposable income is back at record levels. How can you call that achievement?
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The TUC says rising levels of household debt are a result of falling living standards. Average real wages are down 10.4% since 2007. And it’s about to get a lot worse. The OBR projects Retail Price Index (RPI) inflation, the cost of goods and services we all buy, will rise to 4.1% in the final quarter of the 2017 financial year. So the cost of living will greatly increase. Meanwhile, a report from the Bank of England shows that nominal wage growth will actually fall in response to higher inflation, not increase. Coupled together, and we have a record-breaking fall in our standard of living.
A collapse in our economic quality of life does not sound like the strong economy that will fund the Conservatives’ uncosted manifesto.
The Conservatives are also doing a catastrophic job on public debt. Public sector net borrowing, also called the deficit, just reached a three-year April high. The deficit, the difference between money the government spends and money the government receives, was at £10.4bn in April. Overall debt is now at 86% of GDP.
After the Conservatives came to power in 2010, David Cameron assured us:
So though this government has had to make some difficult decisions, we are making progress. We’re paying down Britain’s debts.
UK GDP growth has been revised down to 0.2% for the first quarter of 2017. The impact of Brexit looks to be hitting home. But in May’s Britain, it’s not terrible for everyone. The UK’s richest 1,000 families have increased their wealth by 14% (£83bn) since last year.
As May relaunches her election campaign, many voters will rightly be wondering where the so-called ‘strong economy’ is hiding. And how on Earth will the sitting Prime Minister deliver her uncosted manifesto without it?
– Get out there and vote on 8 June.
– Discuss the key policy issues with family members, colleagues and neighbours.
– Also read more Canary articles on the 2017 general election.
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