UK standard of living hit by rising prices and weak wage growth | Business

Weak wage growth and rising prices in Britain weighed on living standards of a severity that were normally only observed during a deep recession, said a think tank.

While official data has shown real earnings growth to accelerate in recent months, the Resolution Foundation said household incomes fell by 0.5% between 2016-17 and 2018-2019.

Over the last 40 years, said the think tank, only the recession of the early 1980s and the crisis that plagued during and after the financial crisis detracted from performance.

Household income growth was worse than in the early 1990s – real household incomes rose 0.3%, while house prices were in the middle of a six-year decline and that the pound sterling had collapsed from the European exchange rate mechanism on the black Wednesday of September 1992.

In its audit of living standards in 2019, the Resolution Foundation said that the slowdown in the years since the 2016 EU referendum included a broader stagnation in the standard of living since the financial crisis .

This, he added, was triggered by a "severe reduction" in the traditional engine of revenue growth, namely rising productivity.

Productivity growth in the United Kingdom averaged 2% in the decades preceding the 2008 banking crisis, but has barely increased in the last 10 years. The think tank reported that output growth per hour – a measure of productivity – accounted for two thirds of overall economic growth before the financial crash, but only 22% of the growth since then.

Given low productivity, households increased their incomes by working more. The employment is 3 percentage points higher than in 2007, while the average number of hours worked has remained unchanged at 32 hours per week since 2007, after decreasing on average by one hour every four years in the last century.

Adam Corlett, senior economic badyst at the Resolution Foundation, said: "Over the last two years, the standard of living of UK households has stagnated, a level even worse than the income hit by the recession of the early 1990s .

"Restoring decent household growth is therefore one of the most critical challenges facing the new Prime Minister.

"The history of living standards over the past 25 years tells us that families have traditionally enriched themselves over time in two ways: higher wages through increased productivity and support from more people. of women.

"After an unprecedented income crunch over the last decade and a living standards outlook that includes record poverty for children, an economic approach that favors higher incomes for all households must be the number one priority for children. new Prime Minister ".

The ministers of the outgoing Theresa May government quickly seized the latest official labor market statistics, which show that normal wages are rising at their fastest pace in eleven years in terms of cash flow.

The Office for National Statistics said its average annual revenue growth was 3.6% in the three months to May, well ahead of the increase in the cost of living. 1.9%.

The ONS said that between March and May, when the UK was caught in the Brexit uncertainty, the number of jobs increased slightly and the unemployment rate remained at 3.8%. , its lowest level since the mid-1970s.

Recent polls on the economy have painted a gloomy picture of immobile investment and deserted high streets, but unemployment, measured by international standards, has fallen by 51,000 over the quarter to establish to 1,292,000.

Official data has revealed some signs that the UK job boom is running out of steam. Employment increased by only 28,000 in the last quarter. There was a drop of 58,000 full-time jobs, offset by an increase of 86,000 part-time jobs. The increase in the working-age population has resulted in a slight decline in the employment rate.

The Minister of Employment, Alok Sharma, said: "Wages have exceeded inflation for 16 months in a row, the number of people who work is higher than ever and the number of people who work is higher than ever before. registered employment, offers better prospects for thousands of British families and reflects the persistence of society. British labor market. "