GROWTH in income per head in the UK has been “very disappointing” since the start of the economic crisis in 2007/08, a leading think-tank has declared.
The National Institute of Economic and Social Research also said political parties should be called on to “offer solutions that address the lost decade of economic growth the country has endured”, ahead of the June 8 General Election.
NIESR director Professor Jagjit Chadha, publishing the research, said: “Nearly ten years on from the start of the economic crisis in 2007/08, we can observe that…income per head has not recovered especially well - it only passed the peak of 2007 income per head in 2015."
He added: "In comparison to the recovery from previous post-war recessions, there has been very disappointing growth in the overall level of income since 2007/08.”
He emphasised, while the planned exit from the European Union was a critical issue, political parties must face up to the UK’s “underlying economic weakness”.
Mr Chadha said: “The conventional wisdom is that this election is about the UK’s decision to leave the EU and this is clearly a critical question. But we may, once again, be in danger of letting the urgent drive out the important.”
He added: “Political parties should not shy away from facing the question of Britain’s underlying economic weakness and should be called upon to offer solutions that address the lost decade of economic growth the country has endured.”
Mr Chadha cited “large and persistent inequalities” in productivity across different parts of the UK as a key issue. He noted only London and south-east England were showing levels of productivity above the national average.
Mr Chadha said: “The widespread adoption of rules for fiscal and monetary policy has not improved long-run performance...This deterioration in the performance of productivity frames the main and continuing economic problems.”
He cited low real wage growth, low levels of investment and a dwindling capital stock, uneven performance across different parts of the UK, and “rising perceptions of income and wealth inequality”.
Mr Chadha also flagged the risk in the household balance sheet from the emphasis on housing as a store of wealth, and the lack of infrastructure and research and development expenditure.
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