By Maximilian Clarke

The UK’s GDP per capita will likely decline in 2012, having stagnated for much of 2011, the Trades Union Congress (TUC) predicts.

In November the Office for Budget Responsibility (OBR) predicted GDP growth of 0.7% in 2012. But with the UK population set to grow by 0.8% this year, GDP per capita growth - economic growth that takes account of population change - could fall for the first time since 2009.

GDP per capita growth is a crucial economic indicator because it takes account of population growth and whether the economy can create jobs at a fast enough rate to reduce unemployment in a growing labour market, says the TUC.

If the economy is growing no quicker than the size of its workforce, it will struggle to tackle the high levels of joblessness the UK is currently facing, says the TUC.

“Everyone is desperate for an economic recovery - it's the only way to create more jobs, higher wages and greater tax revenues to help pay off the deficit.

“But the government's ill-advised austerity plan killed off hopes of decent growth last year, and the new European-wide austerity experiment looks to set to hold back economies this year too. If the UK doesn't change course it looks like population growth, rather than higher consumer spending or business confidence, is the only thing capable of expanding the economy.

“As the Chancellor approaches one of the most crucial budgets in recent years, he should acknowledge that the dire state of the UK economy requires the government to invest in jobs and to encourage profitable businesses to help stimulate our economy with their growing cash reserves.”

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