A Regionalised Prosperity & Inflation Framework

Our original briefing on a regionalised prosperity & inflation framework (pdf, 2007)
See also parallel LWM work on Reform of the Bank of England

This chart is the official story of prosperity in the UK over the last generation. Both lines on this graph tell roughly the same story: that in some way we have become roughly twice as well off since 1971.

GDP per head in the UK has grown at virtually the same pace as it has in the USA, as shown immediately opposite.

At first glance this might once have seemed to confirm the joint success of the Anglo-Saxon economic model – the driving force of the recent globalisation era.

However the US government, unlike ours, has always issued figures for US average hourly earnings, which have clearly fallen while the American ‘national cake” (GDP) has been growing.

If the UK had as full a range of economic statistics, we would probably find a similar fall here. In both countries most people are on less than such diminished average earnings. Would this decline not explain why it now takes two incomes to run a household that could be run on one income at the beginning of the 1970s? This has become a much discussed issue in the US in recent years, and is referred to as the ‘Two Income Trap’ after a popular book. Barak Obama regularly addressed the issue in the 2008 campaign.

Economic policy needs to change. With support from both the Joseph Rowntree Reform Trust and the Andrew Wainwright Reform Trust, LWM have been looking into how government signposts the changing prosperity of the people in regional England. Only by altering these signs can we begin to change the direction of central drivers of UK policy to safeguard basic living standards in the face of inflation driven by energy prices and other resource pressures.

Read about our proposals for a prosperity and inflation framework for 2013

Andrew Lydon
LWM, Dec 2009 (updated May 2010)

See also parallel LWM work on Reform of the Bank of England

Links:

Media coverage for this LWM project

Web-pages concerning relevant emerging government policy and enquiry submissions

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