Aug
29
2013

Is growth on the horizon?

Our revised forecast for GDP indicates that growth, albeit gradual, may well be on the horizon – the baseline forecast now stands at 0.9% for 2013. Further indications for growth include a modest increase in employment in the three months to April 2013, following a decline earlier in the year. However wage growth continues to be disproportionate, languishing at rates well below inflation and posing a continuing threat to consumer affordability.

Consumers have been hit directly by public sector pay constraints including a two-year wage freeze followed by a 1% rise in the current financial year; a 1% cap on benefits from April 2013, removal of child benefits for high income families and large-scale job cuts in the public sector. In addition to disproportionate wages, continued high levels of unemployment have affected consumers’ ability to secure credit.

Consumers have so far been hit directly by public sector pay constraints including a two-year wage freeze followed by a 1% rise in the current financial year; a 1% cap on benefits from April 2013; removal of child benefits for high income families and large-scale job shedding in the public sector. Indirect effects on consumers stem from weaker wage growth and higher unemployment, than if austerity had been avoided.

To find out more, read our latest edition of our Monthly Digest, by clicking here.

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