[UK] Living standards fall at fastest rate for eight years

In the UK, living standards fell at the fastest rate in almost eight years in December 2021, a situation that will only intensify in April when energy bills and taxes are set to shoot up, Irish Examiner reports.

The UK’s average wage - excluding bonuses - rose 3.6 per cent from a year earlier, less than the increase in consumer prices, according to the Office for National Statistics (ONS). Adjusted for inflation, wages fell by 1.2 per cent, the biggest decline since 2014, it said.

The figures were part of a report that reportedly showed the British labour market remaining buoyant, with employers adding jobs for a 14th month in January in a bid to fill almost 1.3 million vacancies, a record high. Job-to-job moves were also at record heights, driven by an increase in resignations.

However, despite staff shortages - worsened by an uptick in economic inactivity - driving up salaries, the benefits for workers are being swallowed by rapidly increasing prices that are forecast to see inflation top 7 per cent by the spring.

In addition to higher energy bills and payroll taxes, UK households also face the prospect of sharply rising borrowing costs, as the combination of a tight labour market and soaring inflation raises concerns for Bank of England officials. 

Traders are expecting the Bank of England to hike its 0.5 per cent benchmark rate to 2 per cent by the end of this year.

“The pieces continue to fall into place for the Bank of England to lift rates again in March. Another surge in payrolls and a surprise beat on wage growth both suggest the labour market continues to tighten,” Dan Hanson - senior UK economist at Bloomberg - said.

According to the Bank of England, taking all these things into consideration UK households are facing the biggest decline in their disposable income for at least 30 years.

“The squeeze on firms’ finances from high inflation, soaring energy bills and the looming national insurance hike is likely to weaken job creation and further restrain pay growth in the coming months,” Suren Thiru - head of economics at the British Chambers of Commerce - said.

“With high economic inactivity indicating that many people have left the jobs market altogether, chronic staff shortages are likely to weigh on the UK economy for a sustained period.”

The number of people on company payrolls in the UK rose 108,000 in January, although the December numbers were revised down heavily from a rise of 184,000 to an increase of 131,000. 

Britain’s unemployment rate remained at 4.1 per cent in the fourth quarter and vacancies rose to a record 1.298 million in the three months through January, according to the ONS.

Source: Irish Examiner

(Quotes via original reporting)

In the UK, living standards fell at the fastest rate in almost eight years in December 2021, a situation that will only intensify in April when energy bills and taxes are set to shoot up, Irish Examiner reports.

The UK’s average wage - excluding bonuses - rose 3.6 per cent from a year earlier, less than the increase in consumer prices, according to the Office for National Statistics (ONS). Adjusted for inflation, wages fell by 1.2 per cent, the biggest decline since 2014, it said.

The figures were part of a report that reportedly showed the British labour market remaining buoyant, with employers adding jobs for a 14th month in January in a bid to fill almost 1.3 million vacancies, a record high. Job-to-job moves were also at record heights, driven by an increase in resignations.

However, despite staff shortages - worsened by an uptick in economic inactivity - driving up salaries, the benefits for workers are being swallowed by rapidly increasing prices that are forecast to see inflation top 7 per cent by the spring.

In addition to higher energy bills and payroll taxes, UK households also face the prospect of sharply rising borrowing costs, as the combination of a tight labour market and soaring inflation raises concerns for Bank of England officials. 

Traders are expecting the Bank of England to hike its 0.5 per cent benchmark rate to 2 per cent by the end of this year.

“The pieces continue to fall into place for the Bank of England to lift rates again in March. Another surge in payrolls and a surprise beat on wage growth both suggest the labour market continues to tighten,” Dan Hanson - senior UK economist at Bloomberg - said.

According to the Bank of England, taking all these things into consideration UK households are facing the biggest decline in their disposable income for at least 30 years.

“The squeeze on firms’ finances from high inflation, soaring energy bills and the looming national insurance hike is likely to weaken job creation and further restrain pay growth in the coming months,” Suren Thiru - head of economics at the British Chambers of Commerce - said.

“With high economic inactivity indicating that many people have left the jobs market altogether, chronic staff shortages are likely to weigh on the UK economy for a sustained period.”

The number of people on company payrolls in the UK rose 108,000 in January, although the December numbers were revised down heavily from a rise of 184,000 to an increase of 131,000. 

Britain’s unemployment rate remained at 4.1 per cent in the fourth quarter and vacancies rose to a record 1.298 million in the three months through January, according to the ONS.

Source: Irish Examiner

(Quotes via original reporting)