We would not say that the overall picture here is desirable - no one does actually want to have a close rerun of the Great Depression. But the specific response of the British economy here is excellent. And this specific response is something that we've been working toward for some decades now. It's a result of Britain's hugely flexible labour market and it's one of the reasons why we made all those reforms in order to gain a hugely flexible labour market.
But of course, some don't understand this or, perhaps, would just like to find something to complain about:
Britain has suffered a bigger fall in real wages since the financial crisis than any other advanced country apart from Greece, research shows.
A report by the TUC, published on Wednesday, shows that real earnings have declined more than 10% since the credit crunch began in 2007, leaving the UK equal bottom in a league table of wages growth.
Using data from the OECD’s recent employment outlook, the TUC found that over the same 2007-2015 period, real wages grew in Poland by 23%, in Germany by 14%, and in France by 11%. Across the OECD, real wages increased by an average of 6.7%.
The TUC found that between 2007 and 2015 in the UK, real wages – income from work adjusted for inflation – fell by 10.4%. That drop was equalled only by Greece in a list of 29 countries in the Organisation for Economic Cooperation and Development (OECD).
If you look only at that then of course that is terrible. Signed sealed and delivered - an appalling outcome. But of course we should not look only at that, we also want to look at unemployment.
And there the British economy has done quite startlingly well. Unempl;oyment here is 2.5 percentage points lower than in Poland for example, well under half that for the eurozone as a whole and in Greece it's well over 25% compared to our shade under 6% (according to those OECD numbers which are not entirely up to date).
The point being that when the economy crashes, when GDP falls, there will be one of two reactions. Either wages are flexible and fall, or wages are inflexible and unemployment soars. Under models of previous versions of the UK economy the GDP fall that happened would lead us to expect unemployment to balloon out to 4 million, 5 million. And many people did so predict.
Instead, what happened? Wages took the hit, not jobs.
Of course, the GDP fall is not desirable in the least. But it having happened which would we prefer? Wage falls or mass unemployment? And the reason we worked so hard, starting under Thatcher of course, to have a flexible labour market was so that we could gain this result. Perhaps a crude calculation but better that 100% of us lose 10% than that 15% of us lose 100% of our incomes.
Thus this result can be seen as a surprise, yes, but a welcome one. We have managed to alter the economy so that if, as and when, there is that undesirable economic pain we now spread it, share it, rather than dumping it upon those who lose their jobs.
Isn't it lovely when a plan works?