A new study released Monday by the Resolution Foundation and the Centre for Economic Performance at the London School of Economics, has found that after over a decade of economic stagflation, British households have been left 25% poorer than citizens in other countries such as France and Germany.
The study calculated that the living standards in the UK have fallen 3% below the high point they hit in 2020, and they are continuing to decline.
The report said, “Were Britain to close the average income and inequality gap to its peers of Australia, Canada, France, Germany and the Netherlands, the typical household would be 25%, or £8,300 (about $10,500), better off, with income gains of 37% for the poorest households.”
Analysts have said the government should act decisively by increasing productivity, reducing the wealth gap between cities in the UK, supporting services exports, and increasing public investment.
The report, titled, “Economy 2030 Inquiry,” said, “The UK has now seen 15 years of relative decline, with productivity growth at half the rate seen across other advanced economies.”
The report noted that in the 1990’s, and through the 2000’s, Britain had been catching up with the more productively advanced states, such as Germany, France, and the United States. However beginning in the mid-2000’s, the UK began to lag behind, and since then the country’s relative performance has been declining ever since.
According to the study, the average worker in Britain has lost £10,700 (about $13,570) per year in lost income due to the downturn affecting the rate of real wage growth, as nearly nine million younger employees now have never seen an economy with sustained increases in average wages.
The report proposed that the government raise capital spending to 3% of GDP, in an effort to reduce the gap in living standards with fellow European nations, as it increases its funding from domestic savings, and reduces its borrowing from other nations.
The report concluded, “If UK business investment had matched the average of France, Germany and the US since 2008 our GDP would be nearly 4% higher today, boosting wages by around £1,250 a year.”
