London: The United Kingdom is the only G7 country where household budgets have not recovered to pre-Covid levels, trade union body the TUC said on Monday (Jan 8).
“While families in other countries have seen their incomes recover – household budgets here continue to shrink,” said TUC general secretary Paul Nowak.
The situation has “left millions exposed to skyrocketing bills”, pushing many Britons “deeper into debt”, he added.
The TUC said in a report that household disposable revenue in real terms – taking into account rising prices caused by inflation – was 1.2 per cent lower at the end of Q2 of 2023 than at the end of 2019.
But over the same period, disposable income grew by 3.5 per cent on average across G7 countries, it added.
If British households saw the same level of growth, they would receive an additional £750 (S$1,270.21) per year.
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UK inflation peaked at just over 11 per cent but has remained stubbornly high, squeezing household incomes at a time of rising energy prices caused by Russia’s war in Ukraine.
It has eased off to 3.9 per cent year on year in November but food inflation remains high.
According to the TUC, an umbrella body of 48 unions comprising more than 5.5 million members, “contraction in UK household budgets is going to get worse – despite falling inflation.”
It estimates that alongside forecasts from the government’s fiscal watchdog the Office of Budget Responsibility (OBR), “household budgets won’t even recover to their pre-pandemic levels until the end of 2026”.
The OBR said in November that, between 2019 and 2025, the UK would suffer “its greatest reduction in real living standards” since official statistics began in the 1950s.
Nowak called the situation a “damning indictment” of the ruling Conservative party, which has been in power since 2010 and is seeking a fifth term of office at a general election later this year.
A finance ministry spokesperson said it expected lower rates of inflation, tax cuts and initiatives such as increases to the minimum wage would help households.