IEA - There is still work to do to consolidate the UK economy
Mark Littlewood, Director General at the Institute of Economic Affairs commented on the latest GDP figures.
“With 100 days until the General Election, the UK economy is off the critical list, but not yet in rude health. The GDP figures for the last quarter are what we might expect in a normal world in the coming years, given constraints on the supply-side of the economy and an ageing population. Whilst growth overall for the past year has been solid, it’s easier to recover from a crash – however slowly - than to continue to grow at such a clip over the long term.
“And although the economy is now much bigger than pre-crisis, most households - historically used to getting richer by 2% per annum - will only now be feeling that the worst is over.
“It will likely be the time of the next election in 2020 before we have eliminated the deficit and we shouldn't treat today’s news as mission accomplished. A balanced budget should be treated as the norm. Over the long-run, state spending needs to fall to around 35% of GDP, and that must be the new normal.”
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Notes to editors:
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
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