It's necessary to be suspicious of all the economic statistics produced by the ruling class. However, it is interesting to note the claim that France, Germany and Japan, among some other smaller economies, are no longer in recession. What does this actually mean in practice?
Land of rising unemployment
In Japan the economy grew by 0.9% between April and June. This came after 4 consecutive quarters of contraction, so there is still some way to go. A spokesman for Aberdeen Asset Management (Financial Times 18/8/9) suggested that while "other countries have similarly reported better-than-expected economic data, Japan's problems are arguably more entrenched." They think that the main hope for Japan is in exports, "yet rising unemployment and shrinking consumption show no signs of easing" (ibid). In fact unemployment has already reached the highest level ever in Japan's post-war history, and this inevitably has an effect on consumption.
Elsewhere in the same article it quotes another expert: "Japan can export its expertise, but it cannot make things cheaper than hungry developing economies like China and Korea." Competition between the economies of different countries is fundamental. There have recently been many international financial rescue plans put in place - just look at the work of the G20 - but each capitalist entity is still ultimately in competition with each other.
The growth in the Japanese economy has been attributed to the sheer size of the government's stimulus package. Economic commentators are worried about what will happen when it comes to an end. Similarly, with exports being so important then the more Japan is dependent on a revival in the American economy. As things stand most predictions see unemployment staying high and consumer spending low. No one has suggested that the new Japanese government can realistically do anything better.
European success story?
There are similar doubts about the 0.3% growth in France and Germany between April and June. Government measures are credited with causing improvements, which have yet to occur in the rest of the eurozone, and can't carry on forever. A BBC reporter said "although the surprise news was highly welcome for those that have been suffering, there were questions about how strong and credible the economic recovery is. ‘To draw a medical analogy, we've got the patient waking from a coma and talking to medical staff,' he said. ‘They're not necessarily going to be running any marathons soon'" (13/8/9).
The International Monetary Fund tries to take a global view of the situation. In August its Chief Economist was quite straight about what impact the move out of recession would have: "Growth will not be quite strong enough to reduce unemployment, which is not expected to crest until some time next year." He also indicated that, while he thought a recovery had begun, the recession had "left deep scars, which will affect both supply and demand for many years to come". In predicting that global output could also remain lower he was admitting that the prospect of a return to previous levels of production was in no way imminent.
This ties up with observations in a recent report from the European Commission "Europe is likely to suffer a permanent loss in potential economic output as a result of the global crisis, and government finances will be under pressure for years to come" (Financial Times 2/7/9) "The crisis is the equivalent of capital destruction, reducing - at least for a time - the productive potential of the economy." "Current market disruption in financial markets and the more heavily regulated environment that is likely to follow can also be expected to have a permanent negative effect on potential growth, e.g. through reduced availability of capital for R&D and innovation activities." "Empirical evidence of the effect of past crises shows... that the economy will not return to its pre-crisis expansion path but will shift to a lower one. In other words, the crisis will entail a permanent loss in the level of potential output" (ibid.) The limited nature of any recovery is spelt out in these words from the institutions of our exploiters.
Worse in the UK
While others were declaring an emergence from recession the UK economy continues to decline. The further 0.8% between April and June was double what economists expected. The annual rate of decline is now 5.6%, the biggest fall since records began in 1955.
The OECD says that British capitalism will be the last of the major economies to come out of recession. The IMF says that any improvement could soon be dashed as Britain might face a ‘double dip' recession.
As unemployment increases it has become normal to predict figures exceeding three million. The Tories have done some research. As an election approaches we should obviously expect them to make sensational claims. Still, when they say that three million have not had a job since Labour came to power in 1997, two million have never had a job and six million are now claiming job seekers' allowance or sickness pay, the only satisfactory response is to point to the others that are also ‘economically inactive' and add further millions to the total.
On top of that there are officially nearly a million people working fewer than 30 hours a week, a figure 38% up on a year ago. This includes people who've only been offered part-time work (regardless of whether they want it) and hundreds of thousands forced to shorten their hours, and therefore their pay, in an attempt to hold on to their jobs.
In addition to that some young workers are so desperate for an income that they're joining the armed forces. The Army, for example is nearing full strength for the first time in a generation. This is partly because of new recruits and partly because the numbers leaving the Army are dropping.
Unlike incoming Labour governments that promise ‘improvements' after their Tory predecessors, David Cameron is promising cuts in public spending, possibly exaggerated by Labour, but definitely significant. Existing government projections for future levels of public expenditure already point to large-scale cutbacks in public services, so the Tories are only showing that they will be in continuity with Labour.
Cameron has already warned workers not to strike against future cuts, but he anticipates future battles. This is not because he is a ‘terrible Tory' but because, as anywhere else in the world, those who play a part in the management of capitalist economies are compelled to attack the living and working standards of the working class. This does not come down to the nature of their personalities but because of the depth of the capitalist crisis.