There’s a lady I’ve been thinking about for the past few days, even though we’ve never met. She’s the central character in a true story told by the Europe expert Anand Menon. He was in Newcastle just before the referendum to debate the impact of Britain leaving the EU. Invoking the gods of economics, the King’s College London professor invited the audience to imagine the likely plunge in the UK’s GDP. Back yelled the woman: “That’s your bloody GDP. Not ours.”

Subtle and learned this was not. But in all the squawking over the past few days about what’s wrong in economics and with the economy, her brutally simple criticism is closer to the mark than are most of the pundit class.

Economists have completely failed us. They’re no better than Mystic Meg | Simon Jenkins Read more

Consider: the Bank of England’s chief economist, Andy Haldane, admitted last week that his discipline is in crisis. The crash of 2008-9 was a “Michael Fish moment” for him and his fellow economists, who hadn’t spotted the great hurricane even when black clouds were overhead. Cue much hilarity in the media. Oh, those cracked eggheads! There follows some light joshing about forecasts and less-than-super modelling, while economists go on the BBC to paw at one another like tentatively precoital pandas.

Never mind that the banking collapse was a man-made catastrophe, which will come to be seen as one of the hinge-points of the early 21st century; that it has produced a global slump and prompted a wave of drastic spending cuts and tax hikes everywhere from Aberdeen to Athens; that it has left hundreds of millions of Europeans and Americans permanently poorer; that its toxic waste still pumps into our politics, in which grotesques such as Nigel Farage, Marine Le Pen and Donald Trump now wield influence and even presidential power.

Never mind all that, because the British pundit class is expert at cutesifying a crisis, at shrinking any debacle to fit within the confines of an eight-minute studio discussion. So it is that Haldane’s chief recommendation to avoid another such disaster is for economists to get more data so they can produce better predictions. As if the crisis in economics and in our economy were really no more than an inability to spy inclement weather.

Facebook Twitter Pinterest Port Talbot, whose residents voted to leave the EU, and where Andy Haldane gave his ‘Whose Recovery?’ speech. Photograph: Christopher Furlong/Getty Images

None of this stacks up, for exactly the reason identified by that geordie heckler. The economic crisis and the crisis in economics aren’t about technicalities. They are about whose economy, whose recovery and whose GDP the social scientists and journalists are discussing. Nearly a decade after the crash, and nearly four decades into the devastation of Britain’s industrial towns and cities, the UK has become so unequal that it can no longer be talked about as one unitary economy.

When I first read that woman’s comment, it reminded me of something I’ve picked up in my reporting during the past half-decade. Even while David Cameron and George Osborne were boasting on camera of a record-breaking recovery, on the road I noticed two things: hardly anyone I spoke to outside London and the south-east believed that there was any such recovery; and hardly anyone I interviewed within the M25 believed the recovery was based on much more than house prices and debt. Whatever else we might talk about, those two themes were constant.

Mention recovery in Newport and locals would laugh at you. Mention it in north London and most people would add a seasoning of scepticism, or a jibe about estate agents. But in neither place did people believe the recovery was real – or that it included them.

And Haldane knows this. A week after residents in the Welsh steel town of Port Talbot voted to leave the EU, he gave a speech there called Whose Recovery?. He began by mentioning a visit to community groups in Nottingham where, he noticed, the “language of recovery simply did not fit their facts”. He went on to show why, pulling out one of the most revealing graphs I have seen in any discussion of the post-crash economy.

Andy Haldane’s study of GDP variation: ‘one of the most revealing graphs I have seen’. Photograph: Bank of England

Putting together official figures and the Bank of England’s own calculations, it looked at regional GDP per head from the capital up to Scotland. And it showed that only two regions of the total 12 were actually richer than they were before the credit crunch. Those two regions were London and the south-east. Nearly everywhere else was poorer than in 2007 – sometimes, as in Northern Ireland, a lot poorer.

In her riposte to the professor, therefore, the woman in Newcastle was absolutely right. On statistical aggregates the UK is enjoying a recovery. But in reality this has been a recovery for owner-occupiers in London and the south-east. It has locked out those without big assets, such as the young, and those renting in the capital. It has penalised the poor. And it has impoverished those who have been forced on to zero hours or bogus self-employment.

To go back to Haldane’s Michael Fish analogy, the problem with economists isn’t the failure to foresee the storm; it’s that by concentrating on aggregates, they insist it’s sunny outside, when it’s T-shirt weather for a few in central London and the rest of the country is getting soaked.

There was nothing accidental about this result. It was precision-engineered by Cameron and Osborne: make central and local government deliver the cuts, and leave the job of securing a turnaround to the Bank of England with its one-size-fits-all monetary policy. Governor Mark Carney can’t set one interest rate for Port Talbot and another for Pimlico. That task of progressive redistribution falls to the state, and under the Tories it wasn’t on the table.

Cameron’s legacy will be that there is no such thing as an economy

The end result is that the recovery constantly boasted about by the Tories was so partial, so patchy and so dedicated to putting money in the pockets of the already wealthy that it makes a mockery of Theresa May’s speechifying this week about a “shared society”. As the Centre for Research on Socio-Cultural Change argues, it also renders any discussion of unitary issues such as GDP or jobs almost meaningless.

Margaret Thatcher is famous for claiming that “there is no such thing as society”. Cameron’s legacy will be that there is no such thing as an economy – but a series of regional economies with vastly different prospects. A state-subsidised boom for inner London; a neglected pauperism for the Humber.

If there is to be a rebirth of economics and economic policymaking, my guess is it won’t come from within the discipline. It’s more likely to come from a son or daughter of that woman in Newcastle, looking to fix things after realising they’ve been shafted, while others have gained riches simply for being the kids of London homeowners.