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Britain Needs a Strong Economy Everyone Can Benefit From

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With living standards falling year on year for ordinary families, and conservatives on both sides of the Atlantic trying to protect the privileges of a wealthy few, the challenge for progressive politics is to raise the living standards of the great majority of our citizens.

It is this challenge that President Obama is expected to address when he speaks later today at Knox College in Galesburg, Illinois. There is a great deal of interest here in Washington DC in what the President will say, not least because the President is returning to the college where he made his first big economic speech as a newly elected Senator back in 2005.

And it is to meet this challenge of getting more and better paying jobs for middle and lower income working families that former US Treasury Secretary Larry Summers and I are today launching a Commission on Inclusive Prosperity.

The Commission, organised by US think-tank the Center for American Progress, will examine the changes developed economies are experiencing which have contributed to increased inequality, inadequate job creation, and stagnant or declining standards of living.

Countries are now responding to economic circumstances that are very different than those of a generation ago, including the information technology revolution, globalization, and a dramatically changing demography.

The Commission will look at the radical reforms that developed economies need to create more good jobs especially for young people, raise education and skill levels, reform finance and support innovation and entrepreneurship.

Larry and I are co-chairing the Commission's first meeting in Washington DC today and the Commission will also have meetings in New York and London over the next year before reporting in the late spring or early summer of 2014.

And I'm delighted that UK members of the Commission will include Lord Sainsbury, the NASUWT's general secretary Chris Keates and John Van Reenen, the Director of the Centre for Economic Performance at the London School of Economics. The IPPR's Will Straw is also working with us on the project.

Later today I will also be meeting the US Treasury Secretary Jack Lew, the chairman of the US Federal Reserve Ben Bernanke, and visiting the White House to meet Gene Sperling, Director of President Obama's National Economic Council.

There are clearly lessons that Britain can learn from America, where President Obama has used fiscal policy to secure rather than strangle economic recovery. Since the autumn of 2010, the US has grown a staggering four times faster than the UK. The US economy has more than recovered all the output lost after the global financial crisis, but three years of stagnation in Britain means our economy remains over 3% below its pre-crisis peak.

But we also face a shared challenge of ensuring that economic growth is both strengthened and fairly shared. In the US, policymakers are rightly debating why the American 'middle class' is still not feeling the full benefit of their recovery.

Meanwhile in Britain figures tomorrow will show the UK economy is finally growing again - something that is both welcome and long-overdue - but most families are not seeing any recovery in their living standards. Wages after inflation are falling month by month - down by over £1300 a year since David Cameron's government came to power.

We need a strong recovery that everybody can benefit from - a recovery made by the many, not just a few at the top. That means government action now alongside long-term reforms. It's a challenge for all developed economies around the world, but it's one we must rise to. The Commission we launch today will help us do so.

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