An email comes from a Portuguese friend who has moved to Brazil. She and her husband are in heaven. “The money’s great,” she says. “Everyone is expanding so fast; there are so many opportunities; the lifestyle is wonderful… head hunters call us all the time.”
She’s hanging around on the beach at the weekend, eating fusion sushi alongside Sao Paulo’s astonishing architecture in the evenings and spending her days adding up her accumulated bonuses and fighting off the recruitment agents determined to help her make them even bigger next year. Nice. She hopes, she added, “that things get better” for the rest of us soon.
Right now that seems a pretty forlorn hope. The number of economically inactive people in the UK – those out of work and not seeking employment, has now hit 21.5% of the working age population. That’s on top of the 7.9% officially unemployed. The number of people who have been out of work for over a year is up by 85,000 and unemployment among the young by 11,000 to 926,000. That’s before this year’s graduates hit the market. It is this last number that I hope George Osborne is looking at.
When I started work in Japan in the early 1990s, I met huge numbers of Japanese people my age (early 20s) who just weren’t working. Not getting a proper job was often presented as a backlash against the overworked salaryman-style lives their parents had lived. But it wasn’t: it was down to the fact that the private sector, slammed by an ongoing credit crunch and crowded out by an overspending public sector, wasn’t creating much in the way of jobs. Some people I knew got jobs later but many never did: they became a lost generation of over-educated casual language teachers and part-time convenience store workers, dependent in the main on their long-suffering parents – further victims of Japan’s 20-year semi-depression.
Now the UK is on the verge of creating its own lost generation. Government spending is out of control, the only jobs available are of the unproductive council communications officer order, our debt levels are unsustainable and there’s a consensus among the press and many politicians that doing anything to change any of this – by slashing spending – will “derail” our “fragile” recovery.
This is the wrong way to look at things. First, it assumes we have a choice. We don’t. Second, it assumes a real recovery is in place – which is still very much up for debate. And third, it forgets that cutting back on unproductive spending, while painful in the short term, should provide the conditions we need to produce real growth in the medium term. Initially it should provide lower bond yields and eventually it should mean lower taxes, less misallocation of resources and a revived private sector. New governments have a mandate to be bold. Let’s hope Osborne takes advantage of that in next week’s emergency Budget. If not, we’ll all soon be saving up to move to Brazil.