Yesterday marked somewhat of a breakthrough for the UK economy. Having exceeded its pre-crisis peak, back in early 2008, it isn’t a surprise that the headlines have taken the opportunity to boast, especially considering that the IMF have announced the UK to be the fastest growing economy amongst developed countries. Whilst there is no doubt that this is a step in the right direction and it is certainly refreshing to hear good fortune within the economy, we here at the global young executive are certainly not celebrating yet and fear that the emphasis put on the 0.2% growth since the pre-crisis period may overshadow the work that is yet to be done. A 3.1% growth since the second quarter of last year sees the UK’s economic growth edging above that of our friends across the pond and considering that globally the growth for 2022 was downgraded by 0.3% it seems we are growing faster than all other major developed countries. With this comes a huge nod of approval to George Osborne, his long-term economic plan and in his words, ‘the hard work of the British people,’ but what does this all mean for us?
If you, like us, are recent graduates seeking your spot with the working world, surely the prospect of graduating simultaneously with economic growth is music to your ears? Granted this should mean more jobs and essentially more security for us as we enter a daunting but exciting period in our lives, but a deeper understanding reveals that we are still a long way from prosperity. GDP per head is not set to recover for 3 more years and wages after inflation have been reduced over £1,600 a year since 2010. It’s hardly a surprise then that many economists have sought to point out that our economy is still a long way from its 2008 peak in terms of GDP. Additionally, John Hawksworth, chief economist at PwC, makes a valid point in outlining that this growth is not yet sustainable. (Hence, why we aren’t celebrating… yet.) He predicts a slowdown in consumption post 2015 which will subsequently hinder the recovery process. But, what is perhaps most concerning is the fact that it taken us a long and hard six years to get the economy to merely 0.2% above it’s prior peak. As Michael Burke points out an additional 180,000 people are in employment than when the recession began, but output is only a fraction above its pre-recession starting point and whilst jobs are being created this is falling far short of the scale required to keep up with our ever growing workforce.
So whilst on the surface this is seemingly a good time for the UK economy, don’t pop the champagne yet. There is still a long way to go without mentioning the potential economic repercussions of the current crisis in Ukraine and instability in the Middle East. The IMF have warned that these issues present oil price risks which have the potential to drastically hinder the global economy, so we are certainly not out of the woods yet.
Image Source : The Market Mogul