Chancellor Phillip Hammond
The latest consumer price inflation (CPI) data showed a sharp acceleration in prices increases. This will have a negative effect on real wages and real incomes, once inflation is taken into account. Most workers are facing flat wages and the poor, who rely on social welfare and are seeing freezes or cuts, will all be poorer as a result. Even worse, economic trends suggest that this problem will deepen.
Chart 1 below shows the medium-term trend in real wages. It uses single month data rather than the more customary rolling 3-month average data highlighted by the Office for National Statistics (ONS) to smooth out monthly fluctuations. However, the single month data can be superior in identifying key turning-points. As the chart shows, it seems likely we have entered a key turning-point, with a sharp downturn. Continue reading
Real wages are falling once more. In addition, nominal wages have fallen in the last 2 months which is highly unusual. Both of these developments are Brexit effects and the situation is likely to get worse as Brexit unfolds.
The trends in both real (inflation-adjusted) and nominal wages are shown in Chart 1 below. Real wages peaked in April 2008. A very large gap then opened up between real and nominal wages following the crisis, as nominal wage growth slowed and inflation subtracted from real wage growth. But as the chart shows, it is rare for nominal wages to fall, and this has contributed to a marked recent drop in real wages. Continue reading
Chancellor Phillip Hammond
The latest UK GDP data confirm that the British economy remains in a crisis. As government spokespersons never tire of telling us the opposite, and are dutifully echoed by the majority of the media, then it is important to set out the factual case on the economy and to explain where the discrepancy between rhetoric and reality arises.
Once the factual analysis is made the following points are clearly established:
- The UK remains in a crisis
- On key measures of the living standards of the population, the UK is in the worst position of all the advanced industrialised economies
- Fundamental economic factors mean that this crisis is set to deepen
- The project of austerity will be resumed with a vengeance in response to Brexit
The UK economy grew by just 1.8% in 2016. This is below the average growth level since the recession, which itself has been miserably weak. On a calendar year basis, the recovery began in 2010. Since then GDP growth has been an average of 2%, so 2016 was among the slower years in a poor recovery. Continue reading
UPDATE: Since writing this article I was sent a link via Twitter from the Nationwide Building Society Press office, denying the story. Nationwide say:
The GMB’s accusation is disappointing, surprising and, quite frankly, wrong. We have not asked our partners Carillion to reduce the hours of its employees.
So let me confirm what I know to be factually true, and what I can prove. There are 21 cleaners employed by Carillion PLC at the Nationwide Head Office in Swindon. Each of them has been given a letter from Carillion PLC which I have seen, and of which I have a copy. The letter outlines new shift patterns, for the majority of the cleaners, their hours will be reduced so that they lose £40 per week, and they will nearly all be working anti-social shift patterns. All of this is true, I have been told it by the cleaners themselves, and I have copies of the letter.
The letter from Carillion unambiguously states (the exact words): “Why are we doing this? It is what NBS want. Therefore we are responding to our customers’ requirements“. Continue reading