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UK workers see incomes fall in real terms

Even though the politicians and economists are not overly concerned about the recent rise in inflation to around 3.4%, from there are serious concerns about falling incomes in the UK in real terms. A monthly survey from Incomes Data Services has confirmed that the average UK wage increase by just 0.1% last month to an annual rate of 1.9%. This is well below the 3.4% rate of inflation and consequently the average household income in the UK is falling by around 1.5% a year in real terms.

This comes at a time when UK consumers are already struggling to make ends meet and a further reduction in their spending power is the last thing that both consumers and businesses need. We are unlikely to see a significant rise in average wage increases in the short to medium term, as businesses look to replenish their balance sheets, and inflation is unlikely to fall too far during the remainder of 2010. As a consequence, more and more consumers in the UK are likely to see their spending power squeezed yet further and with unemployment expected to top 3 million in the short to medium term the prospects for the UK workforce are difficult to say the least.

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