http://thenextrecession.wordpress.com/2012/05/01/the-uks-weak-recovery-and-profitability/
UK profitability is still some 27% below its peak
in Q4’2007 for all corporations, and has hardly recovered since the
trough of Q3’2009. It’s even worse in the manufacturing sector.
Profitability there is 58% down from its peak in early 2008 and is now
at a low since records began. On official figures, labour’s share of UK GDP
has fallen over the same
period that UK corporate profitability has fallen. So it cannot be
labour’s fault. Indeed, real disposable income has been falling for
eight consecutive quarters. The problem is ‘dead capital’, or excess capacity
in the UK capitalist
sector. This must be cleared before profitability will rise
sufficiently for investment to resume. Since 1997, when the overall
rate of profit peaked in the UK (see graphic above), the mass of profits has
risen 38%, but capital stock has jumped 65%. So it’s the falling
productivity of capital that is the problem, not a rising share of new
value going to labour. And until profitability rises,UK capitalists are on an
investment strike. UK businesses are still investing 15% less than they did
before the crisis at end 2007.
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