Brexit squeeze on living standards drags on for eighth month as real wages fall again

The pinch on family budgets is likely to intensify in the run up to Christmas.
PA
Kate Proctor15 November 2017

The “Brexit squeeze” on millions of families has pushed into an eighth month after real wages fell again by 0.6 per cent, official figures reveal today.

Although average pay rose by 2.2 per cent in the three months to September this lagged well behind the 2.8 per cent increase in the cost of living over the same period, according to the Office for National Statistics.

The pressure on family budgets is likely to intensify in the run-up to Christmas as inflation hit three per cent in September and October, with food prices surging by 4.1 per cent last month. The squeeze began in January when surging inflation caught up with wage growth and has been ahead of it ever since. The spike in shop prices has been fuelled by the sharp devaluation of the pound against other major currencies that followed the referendum vote in June last year.

The latest wages figures came ahead of a speech by deputy Bank of England Governor Ben Broadbent in which he said the fall in the value of the pound had added around 0.75 of a percentage point to the rate of inflation — more than enough to account for the living standards squeeze — so far this year.

He also warned that a “hard Brexit” with no trade deal with Brussels “would involve the immediate imposition of tariffs on imports, further raising their cost.”

City commentators issued their own warning about falling spending power.Maike Currie from Fidelity International said: “This is a huge body blow to cash-strapped consumers looking for some much-needed Christmas cheer, who are juggling the pressures of paltry pay packets, rising prices and the recent hike in interest rates. Wage growth remains elusive.”

Today’s figures also showed the long run of rising employment came to an end during the quarter with a 14,000 fall in the number of people in work, to 32.06 million.

But the jobless rate fell again to 4.3 per cent, the equal lowest since 1975, with 1.42 million out of work.

Employment Minister Damian Hinds said: “The strength of the economy is driving an increase in full-time, permanent jobs”, partly due to government welfare reforms.

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