8 March 2012

The Economy and Women

Sharon White – Director General, Public Spending

International Women’s Day

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Outline

• UK Economy in 2011

• Outlook for 2012

• Impact on women- Labour market; - Spending cuts

• Policy response

UK Economy 2011

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• High commodity prices pushed up inflation, depressing real incomes

• Uncertainty from Eurozone weakened confidence

• Impact of 2008-09 financial crisis on potential growth worse than previously thought

• Lower forecast growth - and worsened public finances – spending cuts will extend to middle of next Parliament at least.

OBR Assessment at Autumn Statement

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Outlook for 2012

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Choppy pattern of GDP growth

Quarterly GDP growth (%)

2011 2012

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

OBR’s Autumn Statement forecast

0.4 0.1 0.5 -0.1 0.1 0.1 0.6 0.3

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Inflation is coming down

CPI inflation (%)

September 2011 5.2

January 2012 3.6

March 2012 (Bank of England forecast) 3.4

June 2012 (Bank of England forecast) 3.0

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Labour market continues to be weak

Eurozone threat remains, but appears to be receding

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• Conditions have generally improved over last two months.

• The anticipated contraction this year may be less severe than expected. Forward looking indicators suggesting stabilisation in economic activity.

Evolution of consensus growth forecasts for 2012

Impact on Women

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Labour market

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• Female employment fell by less in the recession (<1%) than male employment (3.8%)

• Reflects greater resilience to downturn of part-time working and public sector jobs

• Female employment has bounced back by less in recovery than men’s though much closer to peak levels (women: 60,000 below peak; men: 400,000 below)

• But risk to women of falling public sector employment

Public Sector cuts

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• Fiscal consolidation mostly through spending cuts not tax rises

• No gender breakdown available but protected areas of spending include:

• Health• Schools• Aid budget• Defence equipment

• Welfare (tax credits and social grants benefits) being cut alongside public services

Policy Response

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• Getting public finances back on track: maintain market confidence; keep interest rates low

• Maintaining flow of credit: Quantitative easing; credit easing – especially for small and medium sized businesses

• Reforming financial system: New regulation to reduce risk of another crisis

• Growth strategy: Big boost to infrastructure