As the Chancellor George Osborne puts the finishing touches to his Budget, due to be delivered on Wednesday, the BBC’s Hugh Pym and George Alagiah have been investigating the state of the economy.
One prediction that will bring a sigh of relief to most of us is that many economists think millions of workers will finally see their pay grow faster than the cost of living by the middle of 2014. That has not happened since 2009.
That view is backed by University of Glasgow economist Jo Armstrong, who says higher employment and subdued inflation are likely to lead to a rise in real wages.
The view from businesses
Businesses are beginning to feel more optimistic and the British Chambers of Commerce has predicted that this summer the size of the UK economy will overtake the peak it reached in 2008 before the financial crisis.
Liverpool hotelier Jackie Ormiston says her Beatles-themed hotel has seen a rise in both occupancy and the number of British guests as the recovery has taken hold.
Elsewhere in the city, the port’s director David Huck notes an increase in goods on departing ships, reflecting the wider economy.
And factory boss John Rogers says: “The more we export, the better the UK economy will grow. We still have territories in the world that we have yet to crack, which is great news.”
However, the lopsided nature of the recovery is still a concern – something that even Mr Osborne would acknowledge. It is still too dependent on the consumer.
Last year household spending grew by 2.4% while exports increased by just 0.8%.
“Most of the recovery has been dominated by the consumer, and we can’t afford that to go on for beyond a year or so, or we’ll run into fresh problems,” says Jim O’Neill. The former Goldman Sachs economist and inventor of the term “Bric”, used to lump together the emerging economies of Brazil, Russia, India and China, now heads up the City Growth Commission, which has the job of making sure growth is more evenly spread beyond the South East.
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