No growth the norm after biggest wage squeeze since the 1970s
BRITAIN is “sleepwalking” into a new normal of economic stagnation and decline, the Chancellor has been warned, as new research shows workers have suffered the biggest plunge in real pay in almost half a century.
Make UK – the trade body for manufacturers – warned that factories face a 3.2pc plunge in output next year as high energy costs, worker shortages and soaring inflation continue to batter industry.
The bleak forecast came as analysis by the TUC found that 2022 has been the worst year for real wages since 1977 as the highest inflation in four decades squeezes household incomes. Make UK urged the Chancellor to do more to spur growth following the Autumn Statement, saying Jeremy Hunt had not done enough to get the economy moving.
Stephen Phipson, chief executive at Make UK, said that Britain risks “sleepwalking into an acceptance that little or no growth is the norm”.
“Government needs to work with industry as a matter of urgency to deliver a long-term industrial strategy that has growth at national and regional levels at its heart,” he said.
Make UK downgraded its forecasts for Britain’s manufacturing sector today, saying it now expects a 4.4pc contraction this year. That would mark the second annual contraction for the industry and put it in a deep recession.
“There is simply no sugar-coating the outlook for next year and possibly beyond,” Phipson said.
“Even for a sector as resilient as manufacturing these are remarkably challenging times which are testing even the best and most successful of compa- nies to the limit.”
Factories have been hurt by high energy prices, material shortages and weakening global demand despite some signs that supply chain problems are easing.
Make UK said Mr Hunt’s Autumn Statement contained “some welcome measures” but said more was needed to boost the economy’s long-term growth rate. The group called for a temporary relaxation to immigration controls to tackle chronic worker shortages, business rates relief for manufacturers and other measures to spur investment.
The trade body’s survey found that investment intentions in the manufacturing sector have turned negative for the first time in two years as orders weaken significantly.
Separately, the TUC warned that workers are being “pushed to breaking point” by the biggest squeeze on living standards in almost half a century.
Its analysis revealed that pay has slumped 3pc in real terms this year, the sharpest fall since 1977 and equivalent to a loss of £76 a month.
Public sector workers have been the hardest hit as the Government attempts to constrain wage growth over fears it will fuel inflation.
The TUC said that nurses’ real pay was on track to fall by £1,800 in 2022 and paramedics’ have seen their incomes slump by £2,400. Real public sector pay is now £204 lower compared to 2008.
Frances O’grady, the TUC general secretary, said the Conservatives have “presided over the longest real wage squeeze in more than 200 years”.
“Family budgets have been shredded by soaring bills and more than a decade of pay being held down,” she said.
“Workers have been pushed to breaking point by years of wage stagnation.
“If there are strikes across different sectors this winter the Government only have themselves to blame. They have chosen to hold down the pay of our pandemic heroes and make the staffing crisis in our public services worse.”