Forget GDP – These Are The Numbers That Matter

28th January 2017 / United Kingdom

By Annie Quick – New Economics Foundation: Today’s growth figures don’t reflect the lives of most people in Britain. The latest GDP figures are out. These figures are a measure of economic activity, but say nothing about what that activity is. GDP counts growth in the illegal drugs and sex market just the same as the growth in farming or manufacturing, for instance.

As usual, news reporters and analysts will be scrambling to ask what this means for the UK economy. But the real question is what is means for the lives of people across the UK. And the answer? Very little.

The economy this figure describes does not reflect the reality of life for most people. The UK’s economy is so strongly rigged in favour of the few, that, despite economic growth since 2007, most people haven’t seen an increase in incomes. . Meanwhile, the wealth and income of the top 1% and top 0.1% has soared.

The UK is also one of the most regionally unequal countries in Europe, with a vast proportion of GDP remaining in the capital.

FIGURE 1: GDP PER PERSON IN REGIONS ACROSS THE UK

Gross domestic product (GDP) per inhabitant in purchasing power standard (PPS) in relation to the EU28 average, by NUTS2 regions, 2014. Source: Eurostat

For people waking up this morning in Bradford, Plymouth or Sunderland, these figures might as well be describing another country altogether.

Last year millions voted against business as usual, ignoring the stat-based economic arguments of the Remain campaign. It’s clear we need a new way of talking about and understanding our economy.

Key to that is how we measure success, properly holding the government to account on the things that really matter: health, inequality, wellbeing and taking care of our environment.

As we begin the process of leaving the EU, focusing on what we need the economy to achieve has never been more crucial. While the government’s industrial strategy is right to focus on creating jobs, we have to ask what kind of jobs?

The UK’s labour market resembles an hourglass. We have lots of very highly paid jobs in technology and finance, and far too many low paid, insecure jobs in retail and services, with a hollowing out of jobs in the middle. While we avoided the worst effects of unemployment during the recession, research suggests that this was at the expense of the quality of jobs.

SafeSubcribe/Instant Unsubscribe - One Email, Every Sunday Morning - So You Miss Nothing - That's It

The first pillar of Theresa May’s proposal for an industrial strategy is investment in science, research and innovation. It’s an important step, but we cannot fix Britain’s economy with more very highly paid, highly skilled jobs alone.

The regions currently suffering most are those where traditional industries have declined and nothing has replaced them. As we have found in our pioneering work with coastal communities, there is huge untapped potential and energy in these areas. People want to take control of what economic development looks like in their areas.

Having a job is about much more than just having money. What we desperately need are jobs that not only decently paid, but also reflect peoples’ aspirations and skills, offering security, a sense of purpose and opportunities for progression.

As plans for the industrial strategy unfold we must look beyond projections of how much they will boost GDP, looking instead at the extent to which they will create decent jobs, tackle regional inequalities, and give communities genuine collective control over their own futures.

Only then can our economy truly start improving peoples’ lives.