“UK will be a high growth, high skills, high wage economy.”
After briefly rising in the wake of the Covid-19 crisis, real weekly wages fell back below their 2008 level, as workers came off furlough. This fall in real wages reflects the highest inflation since the 1970’s (5.4% now; >9% by autimn).
The UK may claim to be the fifth-richest country in the world, but this is not reflected in the productivity, nor wealth per person. This trend is shown in this chart below.
This results in the UK trailing most of its neighbours and those with whom it competes internationally, with Scotland’s productivity trailing even the UK average, as shown in the chart below.
Declines in the UK balance of trade were once compensated for by “invisibles”, such as financial services,. But, by June 2022, goods exports were barely half the value of imports and barriers from Brexit had weakened the financial sector’s contribution. This has had the effect of devaluing the British pound against the US dollar majing imports increasingly expensive, as shown in the chart below.
The lack of either new “high skill; high wage” jobs, or “levelling up” successes to deal with borrowing at a rate of £264 bn a year, (88% of which is interest on a £2.4 tn debt) makes any “high-wage” economic recovery increasingly difficult—if not impossible— any time soon.