Stagflation and weak economic growth have reportedly led to a gap in living standards valued at £8,300, or well over $10,000 © Getty Images / gregory_lee
More than a decade of economic stagnation has left British households 25% poorer than their peers in such countries as France and Germany, according to the latest research, which was published on Monday.
The study, by the Resolution Foundation and the Centre for Economic Performance at the London School of Economics, shows UK living standards are 3% below their peak in 2020, and are continuing to fall.
“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,” the report said.
Researchers have called for decisive actions to increase productivity by reducing the wealth gap between Britain’s cities, championing services exports and boosting public investment.
“The UK has now seen 15 years of relative decline, with productivity growth at half the rate seen across other advanced economies,” according to the research, titled ‘Economy 2030 Inquiry.’
Britain was catching up with more-productive states like France, Germany and the US back in the 1990s and early 2000s, ‘Economy 2030 Inquiry’ explains, but lagged behind in the mid-2000s, with relative performance declining ever since.
The study calculated that the downturn has cost the average worker in Britain £10,700 (about $13,570) a year in lost income due to the slow pace of real wage growth, with about nine million younger employees who have never worked in an economy with sustained average wage rises.
The research proposed that government raise capital spending to 3% of GDP to close the living-standards gap with European peers, and that it starts increasing its funding through domestic savings and not borrowing from abroad.
“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,” the report concluded.
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