U.K. Households Are Enduring ‘Unprecedented’ Low Income Growth
(Bloomberg) -- U.K. income growth over the past two years has been the slowest in more than half a century outside of recessions, according to the Resolution Foundation.
The think tank’s Living Standards Audit 2019 found that typical household incomes have fallen by 0.5% since 2016, the weakest growth outside of economic contractions since 1961. That’s even worse than in the aftermath of the early-1990s slump.
Poor productivity gains underlie the fall in living standards. Increases in output-per-hour accounted for two-thirds of overall economic growth before the economic crisis, but has now slumped to 22%. Population growth accounts for most of the economic expansion since 2007, compared with just 15% before, Resolution said.
Pay packets have been dismal despite record employment, which has pushed wage growth to 1.8% so far this year, more than double that of 2018. But, when accounting for inflation, real pay remains lower by roughly 3% since its peak in 2008, according to Nomura economist George Buckley.
“After an unprecedented income squeeze over the past decade, and a living standards outlook that includes child poverty rising to record levels, an economic approach that supports higher incomes for all households must be the top domestic priority for the incoming prime minister,” says Adam Corlett, an analyst at the Resolution Foundation.
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