London
CNN
—
Britons hoping for a pay rise in the new year to make up soaring food and energy costs may be disappointed.
According to PwC, average UK workers’ wages in 2023 are expected to fall to 2006 levels after accounting for inflation. Real wages, the driver of inflation, are expected to fall by up to 3% in 2022 and another 2% in 2023, PwC has predicted in a shared UK economy report. with CNN.
The report asserts that Wages have stagnated in the UK even if inflation hits double digits, causing the worst cost of living crisis for many decades. It leads to widespread strike across the UK economy, including railways, schools, nurses, hospitals and the postal service.
On Friday, passport officers began an eight-day strike that is expected to hit some of the UK’s busiest airports over Christmas and New Year, including Heathrow and Gatwick in London. The government said in a statement that the military would assist Border Force but warned travelers could expect delays and disruptions to their arrival in the UK.
“The year 2022 is clearly a challenging year for the UK economy and it is not surprising that these headwinds will continue throughout 2023,” said Barret Kuplian, senior economist at PwC said in a statement.
The report offers some hope. According to PwC, despite the impact on wages, more than 300,000 UK workers could re-enter the labor market by 2023, helping to ease economic stagnation and ease staff shortages in highly skilled fields. At the same time, increased immigration to the UK could contribute £19 billion ($23 billion) directly to the economy, boosting GDP growth by 1% “even if the economy as a whole shrink,” said PwC.
PwC economist Jake Finney said in a statement: “Despite the economy contracting, the UK remains an attractive destination for workers. According to PwC, UK immigration levels will hit a record 1.1 million by 2022, with resettlement programs targeting Ukrainians, Afghans and Hong Kong residents, adding around 140,000 people. into the total.
Even with record immigration, the UK is still lagging behind developed nations in the post-Covid job recovery. Job vacancies hit a record 1.3 million at the start of the year, falling to just under 1.2 million in November. The labor shortage is particularly acute in the hospitality, retail and agricultural sectors.
Search published this week by the House of Commons Economic Affairs Committee has concluded that early retirement is the single biggest driver of the UK’s workforce squeeze. Increased long-term illness, lower EU migration after Brexit and an aging UK population also play a role.
“The increase in inactivity poses serious challenges to the UK economy. The labor shortage exacerbates the current inflationary challenge; damage to growth in the near term; and reduces the revenue available to fund public services, while demand for such services continues to grow,” the commission said.
PwC’s Kuplian added that UK inflation could peak in October and “will gradually start to return to target over the next two years.”
