telegraph | At the time, I was minded to dismiss the suggestion as unduly alarmist. As the
years pass, however, the forecast is if anything beginning to look on the
over optimistic side. Indeed, according to a first attempt by the Office for
National Statistics this week to measure "national well being", we
are already well on the way, with net national income per head falling by
13.2pc in real terms since the start of the crisis in 2008.
Today's third-quarter GDP figures are widely expected to show the UK economy
emerging from its double-dip
recession – indeed the Prime Minister virtually confirmed it in
PMQ's yesterday. Unfortunately, this totemic piece of good news doesn't
really reflect the underlying reality, or the degree to which paying for the
excesses of the past through tax increases, spending cuts, unemployment and
erosion in real wages is eating into living standards. These are suffering
much more severely than the raw output data suggest.
This is no doubt what Sir Mervyn King, Governor of the Bank of England, had in
mind when he warned this week that the next generation may have to live
under the shadow of today's economic correction "for a long time to come".
The Governor is still as reluctant as ever to concede the central bank's own
culpability in the crisis – no mention of that in this week's speech - but
it is hard to disagree with the thrust of his comments – that though the
policy response may have smoothed the adjustment, it can't eradicate it, and
it may now have reached the limits of its capacity to do even that.
As regular readers will know, I've been progressively more sceptical over the
efficacy or appropriateness of further demand management measures to ease
the crisis, so I was heartened to hear Sir Mervyn rule out some of the more
exotic suggestions for getting the economy going again.
