UK households ‘£1,500 worse off since EU referendum’: Think-tank says UK’s income growth is worst of 36 comparable countries
UK households are £1,500 worse off since the EU referendum.
By the end of 2018, real disposable income was £1,500 a year lower than the Office for Budget Responsibility forecasted pre-referendum, says think-tank the Resolution Foundation.
Slowdown: By the end of 2018, real disposable income was £1,500 a year lower than the Office for Budget Responsibility forecasted pre-referendum
Around £800 of the fall in that £1,500 comes from sluggish economic growth, while the rest comes from higher inflation and lower wage growth.
The UK has experienced the sharpest slowdown in income growth of any country for which the Organisation for Economic Cooperation and Development, a club of 36 mostly wealthy countries, publishes data.
The report came out as official GDP figures are expected to show the UK economy at the end of 2018 was 1.1 per cent – some £23 billion – smaller than the OBR pre-referendum forecast in March 2016, the think-tank said.
That figure is equivalent to £800 for every household in the UK.
The report acknowledges that ‘no-one can say definitely how much of that lost income is exclusively down to the Brexit effect but it’s hard not to conclude that Brexit must be the single biggest factor’.
It also says the ‘messy’ political wrangling as Theresa May decides how to proceed with leaving the EU means ‘there are good reasons for thinking that it is not just Brexit itself but also Westminster’s handling of it that comes with a price tag’.
James Smith, research director at the Resolution Foundation, said: ‘Two and a half years since the UK voted to leave the European Union, the country’s post-Brexit position remains far from clear.
‘There has been much discussion about the impact of this uncertainty on businesses, but not enough about its effect on household incomes.
‘The UK’s stark under-performance on income growth since 2016 – which has tailed off more than other advanced economies – has left UK households taking a £1,500 hit to their living standards.
‘As we approach Brexit day on March 29, politicians in all parties need to recognise how much is at stake for family living standards and that how the country goes forward, not just where it is heading, matters for household incomes in the here and now.’
A separate report from fellow think-tank the Institute for Fiscal Studies also said that Chancellor Philip Hammond would have to find an extra £11billion a year by 2023-24 in order to truly end austerity.
The IFS said spending increases already promised by the Chancellor would be swallowed up by commitments to fund the NHS, defence and international aid – potentially meaning cuts to other areas.