The latest economic report from the National Institute of Economic and Social Research (NIESR) puts a realistic dampener on the economic ‘recovery’ for most workers.
They say workers will have to wait six more years before their inflation-adjusted wages are back at pre-crisis levels. Average real wages are still at 2004 levels and it will take until 2020 before they return to their 2009 peak. They also warn that the gradual rise in wages could take even longer if Britain's productivity performance, which has been "abysmal" in recent years, did not improve. This reinforces the warnings we highlighted last month when the latest unemployment figures were released.
NIESR identify consumer spending as the main driver for growth, which is expected to rise by 3.4% this year. This is largely a product of a housing bubble, particularly in the south, encouraged by government schemes such as Help to Buy. While average UK house prices will rise by 6.3% in 2014, it is then expected to almost halve to 3.2% in 2015, and to between 0.5% and 1% per year over the period 2016 to 2018.
This domestic growth masks poor export performance, as domestic demand for UK and imported goods outweighs foreign demand for UK goods. NIESR said; "In the near term, we expect the deficit on the UK's external trade balance to widen."
They are not expecting any increase in interest rates, despite better headline employment figures. That at least will be good news for house owners.
Overall the report predicts global growth of 3.7% in 2014 and 2015 - an improvement on growth of 3.1% last year, "but still a sluggish recovery by historical standards".
The legacy of austerity economics is clearly going to be with us for some time.