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Back to dreary normal

The economy is returning to normal. Latest figures show that since November real GDP has risen 3.5 per cent and the number of employees by 429,000. Yes, both are still well below pre-pandemic levels, but we’re getting there.

Which isn’t as good as you might think. Before the pandemic, the economy was stagnant. Labour productivity, for example grew only 0.3 per cent per year in the 10 years to 2020, compared with 2.2 per cent in the 30 years before the financial crisis. That’s why real wages were flat.

Yes, the economy is recovering well now. But we must not confuse short-lived expansions for the trend. Before 2020, trend growth was weak. Why should the pandemic have changed this fact?

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