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Keeping it private

Matthew Whittaker

Despite the sluggish economic recovery, employment figures continue to surprise on the upside. With the public sector rapidly being cut back, all of this employment growth is of course coming from the private sector. But what does the picture look like across the different parts of the UK?

The green bars in the chart below show the proportional change in public sector employment in each Government Office Region in the period from Q4 2008 to Q3 2012. Unsurprisingly, it shows falling employment across the country, with Scotland, the North East, South West and North West being particularly hard hit. In direct contrast, the pink bars show that private sector employment has increased over the same period in all regions other than the South East.

Squeezed middle: all pain, no gain

Matthew Whittaker

This article originally appeared in Public Finance Magazine

Average incomes in the ‘squeezed middle’ group will take until at least 2020 to return to their 2007 level – a trend made even worse by public sector cuts

With two out of three British workers facing pay freezes, inflation running at an annual average of 5.2% and widespread cuts to government spending on services and benefits, it is no wonder that the Oxford English Dictionary declared ‘squeezed middle’ to be its Word of the Year in 2011.

Waving goodbye to two decades

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Another week, another terrible set of GDP figures, an IMF downgrade of the UK's growth prospects, and a new report showing the squeeze on living standards is set to run and run. The public, along with our politicians, is probably starting to grow immune to some of the shocking headlines about how long it will be before their incomes recover. All attempts at peering into our economic future do, of course, need to be taken with a handful of salt. And if long range economic forecasting is a mug's game, then seeking false precision about the resulting political consequences is truly the pursuit of fools.

Yet for all the uncertainty we can discern the broad contours of different possible paths for living standards over the rest of the decade. None are attractive -- though some are uglier than others. All are likely to challenge the standard assumptions upon which recent politics have been based.

Homeownership: the preserve of the rich?

Joe Coward

This post originally appeared on Mortgage Solutions

One of the most striking findings of our Squeezed Britain report, which sets out the economic position of the squeezed middle in forensic detail, is that home ownership is now out of reach for many people on low to middle incomes (LMI).

On the basis of current incomes, house prices and the loan-to-value ratios now available, it would take a first-time buyer on a low to middle income 22 years to save for a deposit compared to three to five years in the 1980s and 1990s.

The real squeezed middle could stagnate for 20 years

Joe Coward

This post originally appeared on Left Foot Forward

This morning Liam Byrne and David Laws launched a new Resolution Foundation report, Squeezed Britain, which sets out the economic position of the squeezed middle in forensic detail, offering some pointers towards what will be the key political issues over the next few years.

The report focuses on people on low to middle incomes, who the Resolution Foundation define as working-age households who are living largely independent of the state but with incomes below the median (middle).

This group of 10.1 million adults and 5.8 million households comprises approximately one third of the working age population, living on an average household income of £20,500 after tax.

The Breakdown in the Relationship Between Economic Growth and Pay

Matthew Whittaker

This post originally appeared on the Huffington Post

With the fragile recovery in the global economy at very real risk of derailment, strategies for growth remain at the top of agendas across the world. But if we look at the period prior to the crisis of 2008-09, it becomes clear that we need to aim to do more than simply return to 'normal'.

Long before the downturn, there was evidence to suggest that increases in GDP were failing to feed through to broad-based improvements in living standards in a range of advanced economies: for too many ordinary workers, 'growth' no longer led automatically to 'gain'. Although the causes of this breakdown in relationship are many and varied, at their heart lays growing wage inequality.

Share of GDP paid to low earners down 25% in 30 years

Matthew Whittaker

This blog originally appeared on Left Foot Forward

The Resolution Foundation today publishes the latest report to the Commission on Living Standards. The report, Missing Out, (pdf) reveals that the share of GDP paid as wages to the bottom half of earners has fallen by a quarter over the last 30 years.

There is no single inflation rate

Matthew Whittaker

This blog first appeared on the Guardian.

In December we had the wrong type of snow. Now it's the wrong type of inflation, with the chancellor blaming bad borrowing figures on the type of price rises now hitting the UK economy. For consumers that all raises a basic question: what does it mean to say there's more than one type of inflation, and is this type good or a bad for my household bills?