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ECONOMIC “recovery” won’t mean much for ordinary people unless the government acts on the cost of living, the TUC, Labour Party and experts urged today after new data found that the economy was growing before omicron hit.
New figures from the Office for National Statistics (ONS) found that, in November, the British economy was showing signs of recovery.
During that month, gross domestic product (GDP) rose by 0.9 per cent, taking it back above its pre-pandemic levels for the first time, the ONS said.
Chancellor Rishi Sunak hailed the figure as “a testament to the grit and determination of the British people.”
But Labour shadow chief secretary to the Treasury Pat McFadden warned that the cost-of-living crisis meant that the economic recovery was still in jeopardy.
He said: “Inflation is hitting working people and weighing on growth.
“All around the country, households are wondering how they will pay the bills this year. The government has no plan to help them.”
TUC head of economics Kate Bell said: “With the virus still hitting businesses, services and workers, we still need support from government and the Bank of England for a sustainable recovery.
“This should include greater investment to rebuild public services and transition to net zero.
“And to tackle the cost-of-living crisis, we need higher pay, alongside targeted measures to address the energy crisis.”
The recovery in GDP masks a growth in inequality during the pandemic, with the New Economics Foundation reporting in December that 300,000 more people have been plunged into poverty in the last two years while the incomes of the richest have grown.
Communist Party general secretary Robert Griffiths warned that millions more will feel the pain this spring as energy price rises are predicted to plunge another one-and-a-half million households into fuel poverty – “before we take into account the rise in National Insurance.”
He called for an immediate rise in the National Living Wage, to state pensions and benefits, funded by a tax on the profits of the energy monopolies and banks.
The first cases of the omicron variant of coronavirus were only discovered in Britain at the end of November, so it is unlikely to have had any impact on the data.
Pantheon Macroeconomics chief economist Samuel Tombs said that the statistics show “decent progress likely undone subsequently by omicron.”
Julian Jessop of think tank the Institute of Economic Affairs said that it was too soon to “sound the all-clear” and that rising energy bills and tax hikes would “add to the headwinds” this year.
Scottish Friendly savings specialist Kevin Brown pointed out that while the recovery would be celebrated, “it has come at a cost to many households.”
He highlighted that it coincided with a dramatic rise in inflation and the cost-of-living crisis, with families being left to pay the price.
“Sadly, that isn’t about to change quickly, as higher interest rates will take time to bring the cost-of-living crisis under control and therefore the government might need to take further action to relieve the pressure on household incomes,” Mr Brown added.
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