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If you want to know why Theresa May has rushed into calling a General Election, despite repeatedly saying she wouldn’t do so, then the reasons were perfectly summed up by journalist Kevin Maguire on Twitter this week when he wrote the panic is because “Brexit will be a nightmare and living standards will be squeezed by prices rising faster than wages.”
More broadly speaking, fundamental economic factors facing Britain mean that the difficulties we are currently seeing in different areas of our economy are set to deepen.
This may be surprising to some readers, as this Tory government, dutifully echoed by the majority of the media, never tires of telling us how rosy the picture looks for the economy but recent data — including regarding GDP — shows the opposite and reveals that the outlook for the economy is deteriorating.
These problems will be exacerbated by the Government’s economically illiterate commitment to a hard Brexit outside the single market and customs union, alongside their permanent and deepening austerity that starves the economy of much-needed investment.
Already, on the main measures of living standards the UK is in the worst position of all the advanced industrialised economies and is in a unique position of seeing GDP expanding while wages have contracted.
This is within a context where the British economy grew last year by just 1.8 per cent — below even the weak average rate of growth since the recession.
Furthermore, almost all the growth in our wealth has gone to the richest, while working-class and middle-class families have seen real incomes cut by nine per cent since the banking crisis.
In particular, in the immediate period ahead the fall in real average weekly earnings is set to become more pronounced, which could drastically affect the Government’s popularity.
Real pay is already beginning to decline again, contracting at the start of 2017 for the first time since August 2014.
Britain’s wages crisis was also confirmed in a recent IMF report which showed that the share of national income going to workers in wages has fallen since 2010.
Of course, not everyone is doing badly in Tory Britain, with a redistribution of wealth towards the richest a result of political choices from the Government.
Whilst working families are set to be on average over £1,400 worse off following the recent Budget, the Tories are handing out billions of pounds in tax giveaways to big business and the super-rich while at the same time cutting in-work benefits to the low paid.
This means that whilst the government totally fails to ensure that big corporations like Google pay their fair share, they cut the incomes of millions of people in our country.
But other than benefits for the 1%, the constant Tory rhetoric about our great economic performance has no factual substance.
The Tories are taking Britain backwards, living standards have fallen and now the indications are that it is going to get worse leading to a sharpening cost-of-living crisis for millions of people in the years ahead.
Central to these economic difficulties are Britain’s chronically low levels of investment. Investment is not just the most important factor in economic growth but outweighs all others put together. This is why when David Cameron and George Osborne took power and slashed the last Labour government’s investment spending it pushed our economy back into recession.
Investment was lower at the end of 2016 than in mid-2015 –and May and Hammond continue to starve the economy of the investment in skills and infrastructure we need.
In contrast to this, Labour’s economic plan consists of developing a proper industrial strategy to support our key industries; ending austerity and building world-leading public services by taxing the super-rich; and crucially establishing a new national investment bank and regional development banks to drive investment.
This big expansion of investment - including in transport, housing, the green jobs of the future and upgrading our broadband system to match the levels of our competitors - is vital to turning the British economy around, and the challenges we face following the EU Referendum make it all the more necessary if we are to be able to fund the NHS and a decent education for all our children.
Crucially, this economic plan is also the foundation for being able to deliver a series of policies that will benefit the majority of Britons in terms of their living standards, including free primary school meals, a series of important pledges to pensioners including keeping the triple lock, banning exploitative zero hours contracts to give real job security and introducing a real living wage of £10 an hour to give nearly six million people a pay rise.
To avoid real pain in the years ahead, Britain’s economy needs a change of direction, based on investment in our future, delivering on jobs, prosperity and rising living standards.
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