Britain’s 15-year decline has led to £8,300 living-standards gap with its peers
A new report has painted a damning picture of Britain as a country in decline, where the gap between the rich and poor grows every year, public services are on the verge of collapse and a decent pay rise is a thing of the past.
Ending Stagnation from the Resolution Foundation and the Centre for Economic Performance at the London School of Economics and Political Science says that productivity in Britain has grown at half the rate of other advanced economies over the past 15 years.
As a result, wages have flatlined, costing the average worker £10,700 a year in lost pay growth and meaning the nine million younger people who entered the workplace in the past decade-and-a-half don’t know what it’s like to benefit from sustained pay rises.
Highest levels of inequality
The report also reveals that inequality levels in Britain are the highest of any large European economy.
Poor households are £4,300 a year worse off than their French and German counterparts and, overall, there’s a £8,300-a-year living-standards gap between Britain and other comparable European countries.
Commenting on the report, Torsten Bell, chief executive of the Resolution Foundation, said:
“A year or two of low investment and flatlining wages is survivable, but 15 years of stagnation is a disaster.
“Combined with high inequality, our slow growth has proved toxic for low-and-middle-income families, who are now far poorer than their peers in similar economies like Germany and France.”
How do we turn things around
The report suggests, Britain needs to:
- focus on becoming a services superpower, building on its position as the second biggest services exporter in the world
- invest in the public transport and housing of second cities like Birmingham and Manchester in order to attract advanced firms and skilled workers
- increase public investment to 3% of GDP
- boost competition so that good firms are allowed to grow and bad firms shrink
- raise the minimum wage
- improve conditions for workers
- increase benefits
- take more tax from other sources of income and wealth, rather than just earnings
Time to invest in our future
“The task facing the UK is to urgently embark on a new path.
“A new economic strategy built, not on nostalgia or wishful thinking, but our actual strengths.
“Along with honesty about the scale of change needed, and the trade-offs involved.
“It’s time for Britain to start investing in our future, rather than living off our past.”
A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.
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