The biggest wage squeeze in British economic history will leave the average worker almost £13,000 a year worse off by the middle of the 2020s The Institute for Fiscal Studies (IFS), the UK’s leading tax and spending thinktank, said.
The IFS said wage stagnation was expected to continue. By 2026, it said average household earnings would be £30,800, compared with £43,700 if wages had risen at the same pace as in the two decades before the banking crisis.
The 2010s were the weakest decade for real wage growth since the Napoleonic wars.
Paul Johnson, the IFS director, said the real-terms damage to household incomes was unprecedented in modern history, with weaker economic growth and higher inflation to blame. “The gap between what we might have expected on the basis of pre-financial crisis trends and what is actually happening is staggering,” he said.