Duncan Weldon
The new OBR forecasts show real wages (average weekly earnings minus RPI inflation) falling by a further 0.7% this year and growing by just 0.1% in 2014.
This is is sharp contrast to their initial forecasts of June 2010 as demonstrated by the chart below. Not only were the real wage falls in 2010 and 2011 larger than anticipated but this was supposed to the year real wages finally started to grow, up by 0.5%. Next year the OBR originally thought that real wages would grow by 1.0% – a forecast now reduced to just 0.1%.
On the OBR’s initial set of forecasts real wages in 2015 would have been very slightly down on their 2009 level, the latest forecasts suggest that real wages in 2015 will fallen by around 9% since 2009.
The squeeze on living standards look set to continue.
Trackback made by George Osborne's budget speech attempts to pull off a trick of the eye - Government Tenders, Government News and Information - Government Online on Mar 20th 2013 at 10:26 pm:
[...] beer is nice, but makes little dent when wages are falling in real terms, by 9% since 2009 on one estimate. Nor does cheaper petrol much help public sector workers now facing a below-inflation pay freeze [...]
Trackback made by Techno Vision – George Osborne’s budget speech attempts to pull off a trick of the eye on Mar 20th 2013 at 11:07 pm:
[...] beer is nice, but makes little dent when wages are falling in real terms, by 9% since 2009 on one estimate. Nor does cheaper petrol much help public sector workers now facing a below-inflation pay freeze [...]
Trackback made by The most important graph for the UK economy? | ToUChstone blog: A public policy blog from the TUC on Apr 16th 2013 at 11:57 am:
[...] the absence of either strong growth in household incomes (which looks unlikely at the moment) or extremely rapid rebalancing towards investment and net trade (also looking unlikely at the [...]
Trackback made by This is the chart that will determines how the UK economy does | Liberal Conspiracy on Apr 17th 2013 at 8:51 am:
[...] the absence of either strong growth in household incomes (which looks unlikely at the moment) or extremely rapid rebalancing towards investment and net trade (also looking unlikely at the [...]