Real wage drop hits fastest rate since the 1920s

THE UK faces the biggest squeeze on household incomes for 90 years, according to the Centre for Economic and Business Research (CEBR).

Disposable incomes, allowing for inflation, are likely to fall by two per cent over the course of 2011, the CEBR has forecast.

On top of a 0.8 per cent fall in real incomes last year, this would be the biggest drop since 1921, excluding World War Two and the General Strike.

“We have been pointing out the pressures on household incomes for over a year, during which the underlying position has deteriorated as average earnings growth has remained very low while commodity price inflation has accelerated,” said the CEBR’s Douglas McWilliams.

The think tank has published one of the gloomiest forecasts for UK growth in 2011, expecting just a one per cent expansion in GDP.