HOUSEHOLDS in Great Britain have suffered the first annual fall in real earnings for two-and-a-half years, official figures confirm, amid the inflation surge caused by sterling’s post-Brexit vote weakness.
TUC General Secretary Frances O’Grady declared the fall in real wages “risks tipping working people into another living standards crisis”.
The warning came after figures from the Office for National Statistics showed average weekly earnings for employees in Great Britain in the three months to March, excluding bonuses, were down by 0.2 per cent on a year earlier in real, inflation-adjusted terms.
Nominal annual earnings growth in the three months to March was 2.1 per cent, excluding bonuses. Annual UK consumer prices index (CPI) inflation was 2.3 per cent in March, and figures this week showed it surged to 2.7 per cent in April.
Maike Currie, investment director for personal investing at fund manager Fidelity International, noted inflation was expected to rise even further.
She warned: “Prices are likely to outpace wage growth, tightening the squeeze on UK households. As each month rolls by, we’ll be getting progressively poorer as the wages we are earning struggle to keep up with the prices of the goods and services we consume. Given that consumer spending remains the backbone of the UK economy, this is bad news for economic growth.”
Gerwyn Davies, adviser at the Chartered Institute of Personnel and Development, said: “The combination of rising inflation and poor productivity paints a grim picture for UK living standards. This fall in real regular pay also potentially puts at risk an economic recovery that has been reliant on strong consumer spending.”
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