Brits still worse off since recession hit in 2008
30/09/2014
Pay increases will be gradual and under the rate of inflation over the next few years, a survey has discovered.
Household incomes are predicted to grow by a modest 1.8% to 2.0% a year over the next few years, according a survey completed by Earnest & Young (EY), a multinational professional services firm. They also discovered that any boost in household incomes from wage growth in the next few years will be offset by a slowdown in employment growth. Median pay in real-terms is forecast to fall from £18,852 in 2008 to £17,827 by 2017, the survey suggests.
People between the ages of 20 to 30 are predicted to suffer most in the next few years, due to an unemployment rate well above the average and the need to save for larger deposits for house purchases in a continuously rising market affecting their incomes.
The survey also shows economic recovery may not be as strong as first thought. In early 2014 consumer spending, although steadily on the increase, was still below its early-2008 peak. At the same point in the 1990s recovery, spending was 15% above its previous peak in real terms.
The survey suggests this is to do with altered spending habits since 2008. Julie Carlyle, Head of Retail at EY, states:
“The squeeze on household incomes during and after the financial crisis was reflected in our spending habits but, as the economic expansion becomes more entrenched and incomes slowly strengthen, consumers are going to start treating themselves again.
“The upturn in the economy alone is not going to restore the fortunes of the retailers. Instead new business models, better reflecting changing consumer shopping habits, need to be embraced. More than ever before consumers are looking for real value for money and retailers need to recognise this in order to convert increased spending into profits.”
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