UK Households £8,300 Poorer than Their European Peers, Report Finds
A major report released by the Resolution Foundation and the Centre for Economic Performance at the London School of Economics (LSE) reveals that fifteen years of economic stagnation have left the typical UK household £8,300 poorer than their counterparts in countries like France and Germany. This alarming finding has sparked proposals to revive the UK’s economy, raise living standards, and reduce inequality.
The 300-page report, titled “Economy 2030 Inquiry,” could potentially shape the agenda for a future Labour government under Keir Starmer’s leadership if they win the next election. The researchers behind the report have proposed comprehensive measures to boost productivity, including closing the wealth gap between British cities, promoting service exports, and increasing public investment.
According to the Resolution Foundation, the UK has experienced a decline in productivity growth over the past 15 years, with rates only half those seen in other advanced economies. However, the think tank believes that the challenge is not insurmountable. If the UK were to narrow the income and inequality gap with countries such as Australia, Canada, France, Germany, and the Netherlands, the average household could be 25% (£8,300) better off, with the poorest households experiencing income gains of up to 37%.
The report’s launch event, scheduled for December 4 in London, will feature speeches by Labour leader Keir Starmer, Chancellor of the Exchequer Jeremy Hunt, Bank of England officials, and prominent economists. This event signifies the growing concerns across the political spectrum regarding the UK’s underperforming economy since the global financial crisis in 2008. The country has experienced sluggish growth, while productivity, a crucial factor in raising living standards, has lagged behind that of its international counterparts.
Resolution Foundation criticized the current government’s plans, deeming them inadequate just days after Chancellor Jeremy Hunt’s Autumn Statement, which included £20 billion in tax cuts but also signaled significant budget cuts for public services. Prime Minister Rishi Sunak, on the other hand, has made boosting the economy and reducing inflation a top priority, warning that Labour’s proposed plans would jeopardize the progress that has been made. Sunak emphasized, “We have turned a corner. We have grown the economy, and we are now focused on controlling spending and controlling welfare so we can cut taxes. The Labour Party wants to borrow £28 billion a year. That’s just going to push up inflation.”
Resolution Foundation’s report stresses the need for a new economic strategy and urges politicians to be honest about the necessary trade-offs. The think tank calls for increased public investment and funding for public services, but also highlights the need for tax hikes.
The current economic strategy has left the UK economy sputtering, with workers experiencing a decline in real wages as productivity falls behind that of comparable nations. The report’s findings serve as a wake-up call for policymakers, emphasizing the urgency of implementing measures to reverse the economic decline and ensure a brighter future for UK households.
More detail via The Straits Times here… ( Image via The Straits Times )