Average real wages in the UK will still be lower in 2026 than they were in 2008, analysis released yesterday (27 October) by the Office Budget Responsibility (OBR) projects.
In many ways, the OBR’s forecast provided a positive backdrop for Rishi Sunak’s Budget announcements, with a faster-than-expected economic recovery giving the Chancellor room to provide every department with a real-terms spending increase.
Unemployment projections appear positive too, with the furlough scheme and other support measures meaning joblessness is expected to fall from 2022 onwards after peaking at 5.25 per cent.
But the outlook for real wages remains poor. In the short term, the OBR expects real wages to fall: average earnings are forecast to grow next year by 3.9 per cent, below CPI inflation of 4.4 per cent. By 2023, some real-terms wage growth is expected, but at a much slower rate than between 1997 and 2010. By 2026, real wages will still be lower than they were in 2008, marking almost two decades of stagnant earnings.
[See also: How generous was Rishi Sunak’s 2021 Budget and Spending Review really?]