THE squeeze on middle earners exploded into a political battle yesterday, after Labour leader Ed Miliband accused the government of imposing a “cost of living crisis for ordinary families… for years to come.”
The Conservatives hit back, attacking Labour for causing “the deepest recession since the war” while leading the UK to a record annual deficit of 11.1 per cent of GDP in their final year of power.
British households are caught between inflation and sluggish wage growth, with high taxes and cuts burdening middle earners.
Miliband blamed the squeeze on household income on decades of “the richest at the top doing well, and the majority struggling to keep up.”
Increasingly more wealth is paid out in profits rather than wages, he told a gathering at the Resolution Foundation.
The demand for cheap credit leading up to the crash was “because wages weren’t keeping up with the pressures on families, too many were forced to borrow to finance their living standards,” the Labour leader said.
The government’s “reckless strategy for deficit reduction is now about to crash into these long-term trends,” Miliband added.
“It is good to hear Ed Miliband finally acknowledge that a credit glut lies at the heart of the problem, but the hypocrisy is astounding,” hit back Tory backbencher Douglas Carswell.
“It was his old boss [Gordon Brown] who stoked the creation of a cheap money driven credit pyramid.”
The dispute came after a week when the cost of petrol soared by over 1p a litre, after severe upward pressure on oil prices from ongoing unrest in the Middle East.
Unleaded averaged £1.29-a-litre yesterday, up from £1.28-a-litre the same time the previous week.
Miliband yesterday accused the government’s VAT rise of “pushing the price of petrol at the pumps even higher,” while the Conservatives point out 28 tax hikes on petrol during Labour’s recent reign.
British retail companies face a tough year from escalating global commodity prices combined with weak consumer demand in the West.
Yesterday AB Foods – which owns budget clothing giant Primark and Silver Spoon sugar – cited rising food and cotton prices for a hit of more than two per cent to its share value.
And Primark’s sales growth plummeted to just three per cent in its first half, as British consumer morale continues to slump.
High street department store John Lewis – often used as a bellwether of the UK retail sector – recorded a 0.4 per cent fall in sales in the middle of February, it revealed recently. “Given that consumer spending accounts for 65 per cent of GDP, this is worrying for growth prospects,” said Howard Archer of IHS Global Insight.