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Economic Recovery That Suits Some and Ignores the Rest

There is little doubt in my mind that the stronger economic news shows the economy is on the move but its current trajectory is to a recovery that suits some and ignores the rest...

There is little doubt in my mind that the stronger economic news shows the economy is on the move but its current trajectory is to a recovery that suits some and ignores the rest.

Prior to the 2010 General Election, while Britain was deep in the banking crisis and the resultant credit crunch, David Cameron said 'We're fighting this election for the 'Great Ignored; young, old, rich, poor, black, white, gay, straight. They start businesses, operate factories, teach our children, clean the streets, grow our food and keep us healthy; keep us safe.

'They work hard; pay their taxes, obey the law. They're good, decent people... and they just want a reason to believe that anything is still possible in our country.'

So when the Bank of England Governor Mark Carney, declared on 13th November 2013 that the recovery had taken hold, why was it that that only the politicians and the City were celebrating?

Inflation was indeed on the way down with a fall in October to 2.2%, but that's only really if you own a car and pay for your own petrol. Food inflation remains stubbornly high at 4.3% and the cost of rent continues to soar, with average UK rental amounts 2.7% higher than in October 2012 according to the HomeLet Rental Index. And then there is the problem of wages; few people are seeing their pay packets keep up with these inflationary pressures and it is in that context that many people find Mr Carney's declaration a little difficult to comprehend.

Another promising indicator according to the Bank of England Governor is the fact that unemployment has reportedly fallen from 7.8% to 7.6%. Mr Carney has said that when it falls below 7% he will take the brakes off interest rates, signalling the end of the recession and a recovered economy.

My concern is in the quality of opportunity that these jobs offer ordinary people. The question keeps on being asked, how many of these roles are zero-hour contracts and therefore not real jobs at all? In response to this question, the public generally receives silence or fudge but no hard data. The fact that the government maintains full and up to date Pay-As-You-Earn data through the real time PAYE system operated by revenue and customs but chooses not to publish it leaves a vacuum in its place which serves only Westminster's agenda.

Sadly, it is real skilled jobs at the likes of TaTa Steel, Portsmouth's dockyards and others that are really being lost. Last week's announcement of the closure of shipbuilding at this historic South coast naval hub shows that the government's pledge to transfer jobs from the public to private sector is rather hollow.

The whole point of using joblessness data as an economic indicator for the recovery is that jobs are normally accompanied by spending. If the jobs that are being created are predominantly zero-hours contracts they carry little economic benefit, save for the owners of businesses themselves.

It's easier to raise money on the Capital Markets, equity investors are back with a vengeance. The Co-Op bank has lost its soul to the money men (and its credit rating) and thanks to the help to buy scheme, you can have a mortgage up to £600k. However, if you are a public servant you have another round of cuts to look forward to, if you are a low earner your pay will still not keep pace with your costs and if you have a need for social housing, next year's grants are being cut.

Let us not be distracted by an economy that is simply busier. The fact that only a minority of the population are likely to experience any sort of benefit from Mr Carney's recovery shows us what sort of recovery we are building. One that makes the economy work better rather than the re balanced economy we were promised by David Cameron prior to the last election.

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