Low Wage Rise and High Energy Costs Hurt UK Economy
By Anne Lewis-Schneider
With the average households spendable income stretched to the limits, Economists have warned that the much hoped for recovery could fall flat because of a lack of consumer spending, as money is being allocated for increasing energy bills. Wage increases are somewhat lower than predicted and this means a tightening of belts where spending is concerned. The UK has seen a strong third quarter economically, but this could be negated due to the increases in gas and electricity that is hard hitting on the pockets of the general public.
The wage stagnation and a fall in security in the job market is said to be the reason why most households are none too optimistic about their financial positions at present. Although the official statistics show an increase in the GDP over the last quarter as per Spencer Dale, the Bank of Englandís chief economist, the economy relies heavily on consumer spending and this is not happening at the expected rate because of the huge increases of energy bills over the last few weeks.
In a recent survey, 75% of households polled said that they were not optimistic about the state of their financial stability because of a decline in cash available for spending, as constraints grow around the high increases announced thus far by members of the Big Six Energy Companies. Those questioned said that although they could work longer hours, there is still a fear in the workplace of being made redundant. The problem for most households would appear to be the lag between the cost of living and increases in salaries. An economist has said that the mood is better than it has been over the past four year period but is still not at a level where households can feel free to spend.
Inflation rates are higher than the prospects of wage increases and many workers are just not benefitting from the small increments that they are being awarded. Labour has gone on record as saying that the lower wage rises and higher prices means that the employee in the lower income percentile is not able to recover. There is also a widening of the gap between the lowest and highest income groups. The lower income groups are having a tough time keeping up with bills and general household expenses as their readily available cash decreases through inflation and high energy price increases. Energy increases are a marked source of concern for the average household.
Head Office: EATON HOUSE, STATION ROAD, LEEDS, LS20 8XB Company Registration: 4704157 Vat Registration: 817013852