THERE are many reasons to think the overall real-terms fall in people’s pay will intensify.

Organisations from the Institute of Directors (IoD) to trade union Unite were quick to lament the effects of the pay squeeze yesterday, after official figures showed a 0.6 per cent year-on-year, real-terms fall in average weekly earnings in Great Britain in the three months to April.

The resumption of falls in real-terms pay has, of course, been caused by the Brexit vote, which sent the pound tumbling and inflation soaring.

Loading article content

IoD head of employment policy Seamus Nevin said: “Businesses and as a result employees are being hit hard by the rise in inflation.”

He noted the inflation surge is occurring “at a time when poor productivity means wage growth remains modest”.

Len McCluskey, general secretary of trade union Unite, described the UK Government’s Brexit stance as “irresponsible” and flagged financial pressures on millions of nursing, teaching and police staff arising from the cap on public sector pay.

He declared: “The Tories have succeeded in creating the longest period of falling real-terms pay since the Napoleonic wars.”

In terms of how quickly we might get out of this mess, things do not look good.

Annual UK consumer prices index inflation surged further in May, to 2.9 per cent. It was at 0.3 per cent in May last year, ahead of the Brexit vote.

And, in the wake of last week’s General Election and resultant hung Parliament, Mr Nevin warned: “If the current political uncertainty persists, this is likely to increase the downward pressure on sterling’s value, pushing inflation even higher over the next year - with knock-on effects on people’s pay and confidence.”

Political uncertainty could make Brexit-spooked employers rein in pay even further.

Meanwhile, some people who might have thought the Brexit issue was somewhat removed from their day-to-day finances are now discovering this is anything but the case.