Manifesto report: Economy

In this section

• Independent expert commentary from the Institute for Fiscal Studies
• Manifesto clash: living standards
• Manifesto clash: debt and deficit
• Manifesto clash: job security

Introduction

Three issues dominate any discussion of the economy in this election campaign: public finances, living standards, and employment.

First: public finances. The deficit has been centre stage for much of the campaign and the three main parties' plans for it have attracted a lot of attention.

The deficit measures the gap between money going into the government and the money going out. When the government spends more than it receives it runs a deficit. This isn't the same as the debt, which is how much the government owes.

If you imagine a bath tub, the water in the tub is the debt, or the money owed by the British government. The deficit is the water coming in through the tap, increasing the level of the debt.

This year the deficit is expected to come out at around £73 billion and public sector net debt will be about £1.5 trillion.

The Conservatives, Labour, and the Liberal Democrats are all agreed that they need to take measures to reduce the deficit. Despite this agreement, the three parties have drawn quite different conclusions about what repairing the public finances would look like.

The second major issue is people's standard of living. While incomes aren't the only thing that matter—people tend to be quite keen on leisure time, for instance—they are one of the aspects of living standards that we can measure most clearly.

The problem is that we measure incomes a lot. The UK Statistics Authority has identified 15 different reports on UK incomes and earnings, giving parties with a case to make plenty to pick and choose from.

Different measures look at individuals, households, or the sum of all households. Measures might include taxes and benefits, or just look at wages. They look at different people too: for example, people in continuous employment, or just the average person.

Couple this with the range of inflation statistics available and there are even more ways of looking at the same thing. It's currently possible to find figures supporting apparently contradictory points of view.

Perhaps unsurprisingly, the Coalition parties and Labour have managed to do just this, picking indicators that show household incomes are up and wages are down respectively. Our section on the party manifestos breaks this down into greater detail.

You can find our full guide to what different measures look at here but in particular beware of the Statistics Authority's warning that "average measures of income and earnings can give a misleading picture where the population is growing and where there are significant differences in the experiences of different cohorts within society". Averages are not always typical.

Finally, employment looms large in the Conservative and Labour manifestos. While the Conservatives emphasise the growing number of people in employment, Labour concentrates on concerns about the quality and security of jobs on offer.

The employment rate has recovered to pre-recession levels—in fact, to the record level of 73.4%—but the proportion of people in part-time work because they were unable to find full-time work has increased. Of those in part-time employment, 16.4% would move into a full-time post if they could find on, when the average during the noughties was under 10%.

In both cases, it's worth stating up front that when politicians talk about jobs they're usually talking about people in employment. One person can have more than one job, and one job can be shared by more than one person.

Just over 1.2 million people have more than one job, so the difference between the number of jobs in the economy and the number of people in work can be quite large.