The correction came within hours. But the damage was done. Andrew Lansley, shadow health secretary, discovered there are better ways to extend a political career than discussing the merits of a downturn. Labour claimed it was “shameful” for him to say that “on many counts, recession can be good for us”.
But was the real problem his failure to give more than one example? Shouldn’t he have gone further and made a comprehensive case? Don’t all economies, just like politicians, need a correction once in a while?
As politicians are unwilling to recognise the full worth of an economic slump, we will. Behold six good things about a recession. See it as an electoral platform for the inveterate optimist, or a pro-cyclical election pledge card.
1. Cut child poverty
As median incomes fall, so will the poverty bar defined by Labour. So, as if by magic, more children will be lifted out of poverty. No extra money need be spent.
2. Reduce the gap between rich and poor
Footballers, bankers, BBC presenters: brace for the hard times. Inequality is relatively high in the UK but remained quite stable over the past decade, partly because of in-work tax credits and out of work benefits. The slump will finally achieve what politicians were too scared to do themselves: cut the historically large gap between the super-rich and working folk.
3. Raise pensions faster than average incomes
Deflation will put relentless pressure on incomes. But one long suffering group will be exempt. State pensioners will see their income sail along at 2.5 per cent a year — regardless of what happens to the Retail Price Index (which will be the benchmark for most wage negotiations). If Britain enters a deflationary spiral, state pensioners, for once, will be relative winners.
4. A fair deal for public servants
Teachers, policemen, civil servants will be more and more envied by people in the private sector. Public spending will be cut back. But the public sector will take its time trimming headcounts. Many struggling businesses, by contrast, will have no alternative . Those who keep their public jobs will be benefiting from relatively generous pay terms, set over three years. (How does 2.5 per cent a year sound will inflation is minus 2 per cent?) And some of those accepting redundancy will live off a guaranteed pension on terms well in excess of most private schemes. At last, Britain’s brave teachers and policemen will feel valued.
5. Save the planet
Oil prices may have plummeted. But when investment in exploration and refining is cutback, the trend will be upwards. A world in recession will emit less carbon. The Great Loft Lagging Leap Forward will begin. People in the UK will save money by choosing to walk and cycle, rather than drive. Hundreds of millions of people in India and China will have no choice.
6. Reward thrift and punish the profligate
The massive imbalances that underpinned the credit bubble will finally unwind. Saving rates will approach more normal levels. Credit cards will be cut up. Houses will be for living in, not gambling. Britain will begin to live within its means.
Jim Pickard
Kiran Stacey
