‘Working people paying price’ as Tory economic failure hits living standards
A NEW INFLATION SURGE is cutting into UK wages and living standards after a failure to provide stability in the wake of last summer’s Brexit vote.
The Tory party, whose referendum and year of uncertainty led to a double slump in the value of the pound sterling, now faces a living standard crisis on top of the political difficulties from losing its parliamentary majority.
Economic experts and campaigners have warned that the now increased inflation rate coupled with below inflation pay rates means a further pay-squeeze and pressure on the fragile, borrowing dependent services sector. The cut in living standards is expected to continue throughout the year, and risks being extended further by the impact of the Brexit talks.
Stephen Clarke, economic analyst at the Resolution Foundation, said: “The latest rise in inflation adds further pressure to already shrinking pay packets. The uncertain political environment, coupled with Brexit negotiations beginning in six days’ time, is already having an impact on sterling and could create further inflationary pressures down the track.
UK inflation rises to 2.9%, a 4-year high.
This tightens the squeeze on real earnings, which are now falling at the fastest pace in 3 years. pic.twitter.com/Hi4Eii7eLq— Jamie McGeever (@ReutersJamie) June 13, 2017
“The latest rise in inflation will be a double blow to low-income working families, who are also seeing their tax credits fall in value as they have been frozen in cash terms. Many will wonder whether the ‘end of austerity’ announced by the Prime Minister last night could mean a softening of the ongoing benefits freeze.
“With no sign yet of pay settlements responding to rising inflation, Britain’s renewed pay squeeze looks set to be longer and deeper than many originally expected.”
Read more: November 2016: Economists expect inflation to surge after Brexit currency plunge
General Secretary of the Trade Union Congress Frances O’Grady, representing workers, said Tory policy limiting pay in the public sector should be lifted.
“The election showed that working people are struggling. And the biggest price rises in four years won’t provide any comfort,” she said. “Working people are still £20 a week off worse, on average, than they were before the crash – and now rising prices are hammering their pay packets again.”
The fall in the value of the pound increased the costs of imports, which has fed through into higher high-street prices for products like food, clothes, and household goods. A report from credit firm Visa warned that increased inflation could intensify a drop in service-sector spending, curtailing economic growth. The UK fell to last in the G7 for economic growth in the first three months of 2017.
Picture courtesy of Byronv2
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