A cold winter, a warm spring, a royal wedding, Olympic ticket sales, the Japanese tsunami and the eurozone crisis. It might sound like you'd struggle to find a common ground with that list. However, each of these events has been named and shamed by the government this year as a reason for the UK's failure to improve as they said it would; the reasons for quite so sluggish growth, quite so awful employment statistics and presumably for Cameron's missing homework.
Wednesday 16 November saw the latest Labour Force Survey statistics revealed to show UK unemployment has reached 8.6% with youth unemployment increasing to 21.9%. All the indicators are going in the wrong direction, and with relatively few redundancies, graduates become one of the worst hit groups. Chris Grayling, Minister for Employment, pointed the finger, like his Chancellor and Prime Minister before him, at someone else, saying "These figures are bad news. They are I'm afraid the consequence of what we're seeing in the eurozone".
Now, don't get me wrong, what's going on in the eurozone is a big deal and a big mess and probably out of all of the events on that list, has the most potential to cause real problems in the UK domestic economy - particularly if any of the weaker economies like Greece or Italy suffer an uncontrolled exit. The crisis is affecting the financial markets but also the export markets. About half our trade is with the eurozone and if they're suffering they're simply not going to be buying quite so much. However, before we let the coalition off the hook there a couple of things we need to consider.
First of all, our faltering growth and weakening labour market began long before the eurozone crisis became, well, such a crisis. In the first quarter of this year GDP growth stood at 0.4% in the UK whilst France was at 0.9% and Germany 1.3%. In addition, unemployment in particular is a lagging indicator, so effects from the most recent and in fact more potent eurozone problems will not yet show up in the figures.
This leaves the government's argument relying on other listed "negative shocks" to explain the problems predating this recent crisis. It's difficult to believe that what seems to be a persistent inability to recover comes from a series of independent, outside events, included in which is a big wedding. What seems more likely is that it is born of what has been consistent economic policy since the Coalition took office. Implementing austerity has meant significant job loss in the public sector and whilst Osborne's promise of private sector compensation has been found wanting, inflation remains high. The resulting squeeze on real incomes is a squeeze on comsumption, a component that counts for two thirds of GDP.
Secondly, the eurozone crisis was fairly predictable. As a third year economics student, I have written essays in both my first and second year on the problems of the eurozone, finding that the debt problems exposed by the financial crisis appeared unsolvable and trouble was on its way. However it was not only undergraduate economists that could see this coming - my Nanna, who simply spends a lot of time watching BBC news and a lot of time worrying, predicted the eurozone crisis. Given this, even as effects of the eurozone crisis begin to show in our export markets, it is not fair to suggest that an otherwise perfectly forecasted improvement has been spoiled by a nasty surprise. My Nanna would have factored this into her plan.
There is an economic argument for austerity and a reason the IMF backed government plans to cut so severely. However the results of contractionary fiscal policy are at the moment, bleak for Britain and as a result of this we're not even going to meet deficit reduction targets. Moreover, since economic recovery started to stall, the government has stopped explaining why they believe we still need to cut and started blaming anything else they can find. Despite its resonance with the Tory back benchers, it is not fair to blame our crisis on Europe's. The 2.62m unemployed people in this country deserve a proper explanation. And so does my Nanna.
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