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Economic growth slows, and the problem is bigger than the EU Referendum

Economic growth slows, and the problem is bigger than the EU Referendum

The GDP estimates are out for the first quarter of this year and they're not pretty. Growth has slowed to 0.4%, with services the only sector that grew.

No doubt that the uncertainty around the EU Referendum and financial volatility has hurt growth, but after the Tata steel crisis, the Panama Papers, new research showing a third of graduates are in non-graduate jobs and the demise of BHS, it's pretty obvious there's something bigger at play. Taken alone each of these may seem like isolated issues, but together they demonstrate a deeply troubled economy.

Since the financial crash the government has not only attempted to put the wheels back on the same broken economy, they have also withdrawn public spending which would have made the economy more resilient at times that the private sector is less willing to invest.

As it is, the 0.4% of GDP growth is built on shaky foundations - consumer credit, a housing bubble and a deeply flawed financial sector. All the tangible things we understand - manufacturing, construction, high-street retail, teachers and doctors in the public sector – are suffering in the current context.

Furthermore, we are failing to prepare for the key shifts in technology that have already contributed to the collapse of high street stores BHS and Austin Reed. Technological change, including mechanisation and new uses of developing technologies to build companies like Uber, are fundamentally changing the way business works, consumption patterns and the labour market.

We need new answers otherwise we'll continue to see a growing number of the workforce in low-paid precarious work – even those with a graduate degree. The number of people on zero-hour contracts grew by 15 per cent in 2015, this is despite strong campaigning to stem its growth and misuse.

Add to these multiple crises the creeping up of asset accumulation among the richest. The Sunday Times' 2016 Rich List highlighted that it is big property and land owners that are benefitting most from the current state of play. A stark reminder of how many are profiting without producing in our economy. Philip Green's extraction of value from BHS, leaving it and its 11,000 workers at risk, is another sign that the economy is working for the minority, rather than the majority.

Osborne got the rhetoric right when he had his job interview for Chancellor – we need to rebalance the economy and secure our long-term economic future. He has failed to deliver and won’t be able to blame the EU Referendum or China for much longer.