Boris Johnson’s government is on track to deliver the worst rise in living standards of any parliamentary term on record, and incomes are at risk of falling, according to an analysis of official data.
A report by the Resolution Foundation think tank said real household disposable income is projected to grow just 0.5 percent between the end of 2019, when Mr Johnson won a decisive election victory, and 2024.
An annual growth rate of 0.1 percent predicted by the Office of Budget Responsibility, behind the 0.3 percent annual growth predicted by David Cameron and Theresa May between 2015 and 2017, would make this parliament the worst ever for income growth.
The latest figures indicate that the income in the current parliament could be worse. Official figures released shortly after OBR calculated its forecast show that real disposable income growth this year has been weaker than expected.
While the OBR projected that real disposable income would rise 1 percent in the second quarter of this year, the Office for National Statistics found it actually fell 1.5 percent.
The Sankalp Foundation stated that any sustained period of growth since 2007 in a period of several crises has resulted in “historically weak” wage growth.
If income had grown in line with pre-financial crisis trends, households would have an additional £7,000 of disposable income this year – or a third more than they actually were.
In the past 15 years, the average household’s disposable income, adjusted for inflation, has increased by only 9 percent, compared to a nearly 50 percent increase over the 15-year period in the pre-financial crisis.
“Last week the chancellor marked his budget as a ‘new era of optimism,'” said Adam Corlett, chief economist at the Resolution Foundation. “But the economic reality facing families across the UK is far more dire.”
He added: “Of course, the UK can – and should – change this approach. But doing so requires an appropriate economic strategy for Britain in the 2020s that aims to drive higher living standards into its veins.”
Chancellor Rishi Sunak defended the government’s failure to improve Britain’s standard of living while grilling lawmakers at the Treasury Committee this week.
Labor’s Angela Eagle reported that workers had experienced wage stagnation for more than a decade, with the OBR predicting several more years of low-income growth.
Between 1992 and 2008, real wages increased by 36 percent, but in the years 2008 to 2024, OBR is expected to increase by only 2.4 percent, Ms Eagle said.
The chancellor argued that the UK was “not alone” in experiencing weak wage growth. He pointed to reasons for optimism such as an increase in the minimum wage and government investment in research, development and skills.
However, he acknowledged that it was “a struggle to achieve some of the growth rates previously seen”.
Credit: www.independent.co.uk /