Ministers must act to stop “economic self harm”, says TUC

by - 1st November 2011, 7.00 GMT

Union leaders say the 12-month fall in household spending announced in official figures today is a key drag on the UK’s economic growth.

GDP figures published by the Office of National Statistics show a fall of 0.5% in the third quarter of 2011.

TUC General Secretary Brendan Barber said: “This was meant to be the quarter when the UK economy started bouncing back, but that hasn’t happened. You have to go back nearly a century to find a slower recovery from a crash.”

“What’s worse is that this is economic self-harm. The government’s deep auserity programme has choked off what was always going to b a slow and difficult recovery.  No doubt government ministers will to and blame the Eurozone crisis, but these figures date from before the recent difficulties.”

“The government must listen to the growing demands for a Plan B that puts growth and fairness first.”

UNISON says the “dismal” growth figures show the coalition government must “ditch the cuts and take steps to stimulate recovery”.

General Secretary Dave Prentis said: “The government has got it very wrong on our economic recovery.  Public sector cuts are not being offset by private sector growth and all across the country people are really struggling.”

He went on: “Our research shows that many families are thousands of pounds worse off as a result of the VAT increase, indirect tax and benefit changes and frozen pay at a time of high inflation.  Now the threat of a pensions hike could take hundreds of pounds more out of their pockets.  This £4 billion tax on public sector workers is economic suicide.”

UNISON is due to announce the results on Thursday of its ballot for industrial action against the government’s proposed changes to public sector pensions.

 

The ONS figures show consumption in the second quarter of 2011 fell by -0.8 percentage points; the sharpest fall since early 2009, when the country was still in recession.

With wages rising at less than half the rate of inflation, public sector workers facing a pay freeze, and tax credit cuts, benefit reductions and increased VAT further reducing family incomes.

Government expenditure (which made a contribution to growth of 0.26 percentage) and investment (which contributed 0.24 percentage points) just about kept the economy afloat in the last quarter, says the TUC.

It says government spending was particularly crucial – showing its strongest growth since the end of 2008. But with the government’s austerity measures now starting to bite, expenditure is likely to fall and further depress output.