EVER since the Brexit vote, there has been an inevitability about one crucial UK economic theme for this year.
That theme is the combination of surging inflation, caused by sterling weakness, and poor earnings growth, reflecting not only the erosion of employees’ bargaining power over recent years but also now companies’ wariness over raising salary bills given Brexit is looming. The Brexit vote, as we should all know by now, has added very significantly to the UK’s economic fragility.
The latest figures from the Office for National Statistics show a surge in annual UK consumer prices index inflation from 2.7 per cent in April to 2.9 per cent last month. So annual inflation, which stood at 0.3 per cent in May last year ahead of the Brexit vote, has moved yet further above the Bank of England’s two per cent target.
For hard-pressed households, which have had to navigate the financial crisis, the 2008/09 recession and years of grim Conservative austerity, the combination of surging inflation and paltry pay settlements is unpalatable indeed.
The latest Scottish Retail Consortium figures today show continued weakness of non-food sales, the more discretionary element of high street spending.
ONS figures last month showed households in Great Britain had suffered the first annual fall in real earnings for two-and-a-half years. Average weekly earnings for employees in Great Britain in the three months to March, excluding bonuses, were down 0.2 per cent on a year earlier in inflation-adjusted terms. Yesterday’s inflation numbers indicate that things are very likely to get even worse on this front.
We should not forget the extent to which consumers have had to fuel the UK’s albeit unconvincing economic recovery over recent years.
But they can only keep supporting it if they have enough money in their pockets, and the inflation figures suggest that might be a big problem.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel