When we came into Government Ed Balls said that austerity would 'choke off growth'. Ed Miliband predicted that our plans would cost the economy a million jobs. We heard about a double-dip and even a triple-dip recession. Eminent left-wing economists confidently forecast a Japanese-style 'lost decade'.
This year's Autumn Statement not only showed how wrong they called it, but also what would be put at risk if we abandoned those plans.
Britain is now growing faster than any other major advanced economy, three times as fast as the Eurozone. Crucially, this is a balanced recovery, with manufacturing growing faster than any other sector and business investment up by 27% in this Parliament, rising faster this year than any other country in our peer group.
But this isn't just about statistics. Those numbers mean more people in work the security of a monthly pay packet. Over the last year half a million new jobs have been created, 85% of them full-time. Unemployment is forecast to fall to 5.4% next year, down from 8% at the last election.
Of course there's still much more to do, particularly on pay. However it's important to recognise that weaker earnings is one of the prices we've had to pay for such strong job growth. Falling unemployment has an impact on average wages because of 'compositional effects' in economic jargon. Young people and those previously unemployed now finding work don't command such high wages, as they tend to be going into entry level positions. This brings down the national average. If you strip out this effect and look and people who've been in work for at least a year, average wages have risen by 4% over the last year. It's very encouraging that today the OBR, the Government's independent economic analyst, predicted that 'meaningful real wage growth' will pick up through the next year and grow faster than prices for the next 5 years.
To make sure that happens and keep the recovery on track it's vital that we stick to our long-term economic plan of balancing the books and rebalancing the economy.
At the Autumn Statement the Chancellor revealed that the deficit is now down by half. Although Ed Balls said the deficit was going up, it's actually falling from £98billion last year to £91billion this year. By 2018/19 we'll be back in the black for the first time in a generation. To see this through we know more tough decisions will have to be made, yet the costs of losing control of the public finances are far greater.
We saw in the Autumn Statement that the hard work of finding savings is starting to pay off. The Chancellor announced that we can now afford to put an extra £2billion a year into NHS frontline services. We're also able to increase the tax-free personal allowance to £10,600 next year. On top of earlier increases to the personal allowance, this means that in 2015/16 the typical taxpayer will be paying £825 less in income tax than they were in 2010, giving a much-needed boost to family finances.
Of course in the long run, higher wages and increased public spending can only be paid for if we as a country can compete with the best of the rest of the world. The Autumn Statement set out further steps on that path towards prosperity. Employer National Insurance Contributions will be abolished for apprentices aged under 25, making it easier for firms to train up the next generation. We're introducing student loans for postgraduate qualifications so more people can afford to study high level skills. £5.9billion will be invested in science to cement our position as a world leader in research and innovation.
But alongside creating more highly skilled, well paid jobs, economic rebalancing also means making sure that growth is more evenly spread across the country. So I welcome the Chancellor's announcement of further plans to turn the great cities of the North into a single giant business cluster. These 'Northern Powerhouse' proposals include updated transport infrastructure, funding for a new research centre for advanced materials in Manchester and a shale gas sovereign wealth fund for the North of England, to ensure that profits from fracking are reinvested back into the North.
Finally, this year's Autumn Statement showed how we're using the tax system to deliver on our values.
We back the British dream of homeownership, so we're cutting stamp duty for 98% of people who pay it, with only the very richest homebuyers paying more.
We back small business because we know it takes guts and hard work to set up on your own. That's why we're extending the doubling of small business rate relief which takes 380,000 small businesses out of the rates altogether, and also increasing the business rate discount for high street shops and cafes to £1500. We've also announced a review into the structure of small business rates, looking at what we can do update a system which taxes physical property in an age where so much business takes place online.
And we believe in lower taxes, but we expect businesses to hold up their side of the bargain by paying those taxes in full. So we're introducing a 25% tax on multinationals that artificially divert profits and limiting how much banks can offset previous losses against profits.
Thanks to the hard work and sacrifice of the British people we've come a long way from Labour's Great Recession. This year's Autumn Statement was about seeing the job through and laying the foundations for future prosperity. I'm proud to support it.