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5 July 2022

UK wages have fallen behind European rivals

By 2018, UK incomes were just 9 per cent higher than in 2005, compared with 40 per cent in Germany and 39.8 per cent in France. 

By Nick Ferris

UK wages have sunk far below those of European competitors, according to data from the Resolution Foundation’s latest Living Standards Audit

Back in 2005, the UK’s median disposable income, when adjusted for purchasing power, was higher than that of Germany and France, at around €17,000, compared with €16,000 and €14,500, respectively. But by 2010, the UK’s median income had fallen below that of France, Germany and other European neighbours including Ireland, the Netherlands and Belgium.

By 2018, UK incomes were just 9 per cent higher than in 2005, compared with 40 per cent in Germany and 39.8 per cent in France. 

This report comes as the threat of a UK recession grows. Inflation for the year to May stood at 9.1 per cent, with the Bank of England predicting it will hit 11 per cent by the autumn. Consumer confidence has fallen to the lowest level on record, and the UK is forecast to grow slower next year than every G20 economy except Russia. 

The Resolution Foundation warns that the slump in income is the result of a “toxic” combination of both low growth and persistently high income inequality in recent years. Policymakers should aim ambitiously for higher income growth in the 2020s, say the authors, in order to raise the living standards of the poorest in society and prevent UK wage growth from sliding further.

[See also: How the value of child benefit has plummeted]

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