THE BLOG
30/10/2013 10:02 GMT | Updated 29/12/2013 05:12 GMT

For Whose Benefit?

The title of this blog is a loose translation of the Latin expression 'cui bono' and in particular I am referring to the recent statistics, most especially Friday's economic growth figures which suggested that we are now in recovery mode.

Some five years after the consequences of the global financial crisis really started to be felt it is worth considering where we are.

We were promised that after a period of austerity and some readjustment we would be now be starting to feel the advantages of a more balanced economy. This was what was promised by the two parties who formed the coalition government three years ago.

The reality, of course, is somewhat different.

Last week's GDP figures are undoubtedly good in that there is a return to overall growth. The problem is that once you examine the data there is little to demonstrate that we have moved away from reliance on precisely the sectors and behaviour that got us into the financial mess in the first place.

We are now more reliant on the service sector and there is an increasing amnesia about the fact that property speculation and financial services are poor substitutes for making real things that can be exported; and lead to a 'export-led recovery'.

What is worse is that whilst there was the inevitable focus on the overall GDP (Gross Domestic Product) figure of 0.8%, economic growth is now even more concentrated in the south-east of Britain than ever.

The exhortation to spend more, especially in the lead-up to Christmas, is fuelled by extremely low interest rates but, as we should be aware, they will eventually start to rise.

Pay for many remains either static or going up at a rate well below inflation.

In short standards of living are declining and show no sign of improvement anytime soon.

Perhaps the greatest irony was that the hearing of the Energy and Climate Change Committee took place in The Thatcher Room of Portcullis House when energy bosses were quizzed about the belief that their companies are not really engaged in the sort of competition that was promised when the state-owned companies were nationalised in the 1980s.

Privatisation, we were told, would increase the willingness to serve customers and give us better service and cheaper gas and electricity.

This argument seems a bit hollow given we have seen phenomenal increases in our utility bills in recent years.

That energy regulator Ofgem believes that wholesale prices have risen by less than the current rate of inflation (about 2.7%) makes the recent announcement by some of the 'big six' to raise their prices by almost 10% seem like greed. According to Ofgem this would mean that the average household would now be paying an extra £10 on a bill of £600 for gas.

Fascinatingly the boss of micro energy provider OVO - currently some 140,000 customers but likely to gain more, admitted he was confused and, given that wholesale prices paid by his company are actually falling, apparently cannot see the justification for the huge increases made by other companies in recent weeks.

Coupled with the fact that many companies have not invested in new plant in the way that an economy such as Germany has and that there is an increasing propensity to use cheap labour on short-term contracts and the future is not as bright as the advocates of continued austerity would have us believe.

If there is recovery it is one that is skewed in favour of the rich who, particularly in London, have not felt the pain of being squeezed by rapidly rising costs of energy and food.

If some feel that their hard work and suffering during austerity has been in vain they cannot be blamed.

Indeed, they might reasonably ask, for whose benefit has it all been for?