Things are grimmer than in 2008. Welcome to 2013.
Remember the heady days of 2006? When life was good and we couldn’t imagine a world where bankers began with the letter w or that a triple-dip recession was even possible? Remember the dark days of 2008, when things were bad, but as Professor Brian Cox told us back in 1997, things could only get better?
They got worse.
New figures from 2008 to 2012 released today show that poor wage growth and high inflation mean that in 2012 we were actually worse off than in 2008.
In a comparison of nominal average monthly incomes (actual take home pay figures) and inflation-adjusted equivalents, today’s private sector workers’ take home pay in real terms is, on average £89 per month less than in 2008.
Inflation, bringing down the value of the net wages is part of the problem, but poor wage growthis also to blame. The actual take home pay has increased by £92 compared with 4 years ago, but growth in wages is down to just 0.4% in the three months to December. This marks the lowest rate of annual pay growth since March 2011. Not that this is unrepresentative of the country as a whole- public sector workers are generally on a pay-freeze and even benefit claimants are looking at a pay rise of only 1% .
Douglas McWilliams, Chief Executive of economics consultancy Cebr, said: “The consumer price index in November 2012 stood at 2.7%, well above the Bank of England’s central target of 2.0%. Today’s findings clearly illustrate the downward pressure that these elevated inflation rates are placing on peoples’ wallets. With energy prices scheduled to increase in December and January, inflation is now looking set to ramp up and remain elevated throughout much of 2013. As such, it could be some time before incomes regain spending strength.”
Happy new year, chaps.