Economy is out of kilter

The TUC has accused the government of failing to rebalance the economy as a report reveals that it is now more dependent than ever on financial services.

The TUC’s latest Economic Report shows that on the eve of the recession the UK economy had four key imbalances that helped cause the crash and are now preventing economic recovery. It identifies low levels of investment; an over-reliance on financial services; a North-South divide; and widening wage inequalities that had resulted in no pay growth for low and middle-earners for five years, despite the economic boom.

TUC general secretary Brendan Barber said: “Everyone agrees that our economy needs to be better spread across industries and throughout the country.”

However, he said that “so far progress towards achieving this rebalancing has been woefully slow and in some cases is going in the wrong direction”.

The report shows how the over-reliance on the financial services sector has continued with the most recent growth figures showing business and financial services growing by 0.8% on last year, while manufacturing contracted 3.1% over the same period.

Meanwhile, the proportion of the economy accounting for exports and investment is stuck at around 13% — the same level as five years ago.

Report is at: http://www.tuc.org.uk/tucfiles/359/EconomicReport3.pdf