'Your experiment with austerity economics has failed on living standards, jobs and growth and on deficit reduction too – and the British people are paying the price for this failure.'Today I note that that left wing economic commentator Paul Mason in The Guardian writes:
'The argument that fiscal austerity would lead to deep recession or permanent stagnation has proved false. In part, this is because the austerity is back-loaded, with the heaviest cuts starting now. But the economy has also refused to behave as the doomiest predicted. People have clung to jobs, even at the cost of tolerating zero-hours contracts, wage cuts, pension raids and unpaid overtime.Maybe the headline is the best summary:
It is true that GDP per head is stagnating. It is also true that if you measure GDP against the retail price index, instead of the government-preferred CPI, it is flat. It's also true that growth is patchy regionally – not just between regions but even within small towns, as Rochdale shows. However, the headline GDP figure is important. If, in the next few quarters, its growth is sustained, the narrative of the government's critics on the left will have to change.
But sustaining the recovery is where the second political problem begins. Our last mini-recovery was choked off by inflation: real spending power shrank and growth went into reverse. This time there is more government money flowing through the credit system, through Help To Buy, and the funding for lending scheme – where the government underwrites bank lending risks. So this time the recovery may be able survive renewed inflation.'
Ed Balls and reality, now those are strange bedfellows.The economic recovery may be patchy, but the left is wrong to ignore itIt's not the same across the country, but there are signs of growth. The challenge for Labour is how to make the most of the new reality