The spending power of workers across numerous regions of the United Kingdom is anticipated to remain below pre-pandemic levels until the conclusion of 2024, cautioned a prominent think tank.
The National Institute for Economic and Social Research (Niesr) outlined that a confluence of factors, including Brexit, the Covid-19 pandemic, and Russia’s incursion into Ukraine, has significantly impaired the nation’s economy.
As a consequence of this challenging amalgamation, the institute projected a span of five years characterized by “stalled economic growth” for the UK, disproportionately affecting the most economically vulnerable segments of the population.
Calling attention to this concerning trend, the think tank advocated for increased investment in regions of the UK that are grappling with financial disparities.
In recent times, there has been a notable surge in inflation, resulting in higher living costs for a considerable portion of the populace. While wages have also experienced an upturn, their growth has lagged behind the pace of rising prices, leading to a sense of financial constraint for households throughout the country.
Niesr, a venerable economic forecasting institution, disclosed that, in view of these dynamics, the reconciliation of pay with inflation-adjusted benchmarks is expected to be realized only by late next year in locales such as the North East, Yorkshire, the West Midlands, Wales, and Northern Ireland.
In contrast, regions including London, southern areas of England, the North West, and Scotland are poised for a comparatively swifter recovery in real wages.
Illustrating this divergence, real wages in London are projected to surpass 2019 levels by an estimated 7% by the close of the upcoming year. In contrast, the West Midlands is anticipated to experience a decline of around 5% in real wages during the same period.
Prof. Stephen Millard, Niesr’s Deputy Director for Macroeconomic Modelling and Forecasting, underscored the swift progress of London’s economic revival but also acknowledged that the capital’s advancement could be attributed in part to favorable circumstances.
While London propels ahead, the broader implications of regional disparities in wage recovery persist, prompting calls for targeted measures to bridge the economic gaps across the UK.
