A year ago we looked at what would be the impact of the spending review on the UK economy and it’s certainly been a very exciting year for the UK economy although quite a difficult one because we’ve had all kinds of global shocks. We’ve had oil prices going up, we’ve had the Arab spring, we’ve had problems in the US economy and with the US budget deficit and we’ve had this on-going crisis in the Euro zone. So as a result of that really the recovery in the UK has pretty much stalled over the last year and conditions have been much more difficult than the Chancellor or anyone else could have been anticipating when he first set out these spending review. So it does seem like a good moment to look back and assess what’s happened. And in this report we’ve looked particularly at jobs because I think that’s what really matters to people. And I think there’s good news on the private sector because we’ve gained nearly 600,000 jobs since the end of the recession, but on the other hand we’ve lost about 290,000 jobs in the public sector and particular in areas like local authorities in England, I think we have seen faster than expected job cuts and that’s obviously hit those economies in places like the north-east and the south-west quite hard. And even in private sector I think areas like construction have seen quite a lot of job losses since the end of the recession.
I think a year ago we had a jury of citizens that looked at what they were looking for from the spending review and we reconvened them in September to see how they thought the government had been getting on and again there was a bit of good news and bad news. The good news I think is they think that some progress has been made on areas like welfare reform and cutting back office spending in some areas of government, although even now they think there’s more to be done. The bad news I think is that people are feeling very anxious because of the uncertain economic environment and still not clear that the government has a real agenda for growth in areas like education policy and kind of green growth looking at new alternative sources of energy for example and seeing how the UK could become a world leader in those areas. So I think the government still has more communicating to do to get across its growth strategy.
Well I think the Chancellor in his autumn statement on 29 November should reiterate his commitment to getting the budget deficit down in the medium term but mainly to fine tune some of his plans a bit, particularly in the area of capital spending where I think he could maybe invest a bit more in areas like road and rail and hospitals and schools to try and build up the nation’s infrastructure and also give the economy some support in the short term. At the same time I think it will be interesting to hear more about his plans for credit easing to actually help the flow of lending to small businesses who have been suffering recently from cash flow problems.