UK economy: can it last?


Michael Roberts Blog

It has been all good news for the UK economy over the last few months, with unemployment falling, inflation subsiding and industrial output growth accelerating (see my post, http://thenextrecession.wordpress.com/2014/06/10/uk-industry-some-predictions-for-2015-onwards-and-a-piketty-review/). Of course, it’s not been good news for the average British household, as real incomes continue to fall, with new jobs concentrated in lower wage sectors and part-time or temporary contracts (often ‘zero hours’) –see my post, http://thenextrecession.wordpress.com/2014/06/11/real-incomes-in-the-uk-still-falling-global-growth-slows/.

But capitalist investors have liked the look of the recovery: house prices have boomed (but mainly in ‘international’ London) and the British pound has strengthened against the euro and the dollar.  But a strong pound and an economy recovering ‘unproductively’ is not a recipe for sustained economic growth in the productive sectors of industry. If the prices of British exports rise because of a strong pound, British manufacturing will be priced out of world markets. And they have not been doing well…

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