Britain is only G7 economy in Europe with falling wages, warns OECD
Real wages in Britain are still falling even as workers in Germany and France see their wages rebound, new figures show.
The UK is the only European G7 country where incomes continued to fall last year after adjusting for inflation, according to the Organisation for Economic Co-operation and Development (OECD).
Figures published on Wednesday show average real income in Britain dropped by 0.6pc between July and September as soaring inflation chipped away at purchasing power.
That contrasted with average growth in real incomes of 0.2pc across OECD countries where data was available.
Households in Germany, France and Italy all saw their real incomes improve, with French families seeing the largest boost in purchasing power, at 0.8pc.
Incomes stagnated in the US and declined slightly in Canada over the period. However, Britain suffered the steepest drop across the OECD.
High inflation was to blame for the blow to household spending power, the OECD said.
In the UK, inflation was 8.7pc in the three months to September, while it was 8.5pc in Germany, 8.4pc in Italy and only 5.9pc in France.
Britain is suffering the largest loss of purchasing power since the oil crisis in the 1970s, according to a separate analysis published by the Office of National Statistics (ONS) on Wednesday.
Workers in the public sector have been most exposed to rampant inflation, the ONS said, although those in the private sector have also seen a real-terms decline in their earnings.
Overall, the UK is one of few countries where real household income per head has still failed to overtake pre-pandemic levels, according to the OECD.
“High consumer prices in the United Kingdom over the past year have continued to undermine household income when measured in real terms, causing real household income per capita to decline by 3.9pc [since 2019],” the OECD said.
Real incomes have also failed to recover from the pandemic in the Czech Republic, Denmark, Finland, Portugal and Spain.
The bleak figures add to pressure on the Bank of England and Rishi Sunak to bring rampant price rises under control. Mr Sunak has made halving inflation this year one of his cornerstone goals.
The OECD and ONS's findings come during another wave of mass strikes across Britain, as industrial disputes over pay and working conditions, triggered by soaring inflation, continue across the public sector.