REAL wages will fail to take off in the next couple of years, a group of economists will warn today in a report that predicts sluggish growth in consumer spending.
The EY Item Club expects the UK’s jobs boom to continue, with employment climbing higher. Yet “annual wage growth over the next three years will remain well below the 4.5 per cent to five per cent rates typical before the crisis,” the economists add.
As a result, consumer spending will rise by just over two per cent next year and in 2016, the forecasts show. However, one-off discretionary purchases are expected to be a bright spot.
“The squeeze on household incomes during and after the financial crisis was reflected in our spending habits but, as the economic expansion becomes more entrenched and incomes slowly strengthen, consumers are going to start treating themselves again,” EY’s Julie Carlyle will say.