Most British consumers have been more likely to get into debt because they have not enjoyed the full fruits of economic growth in recent decades, lead…
Most British consumers have been more likely to get into debt because they have not enjoyed the full fruits of economic growth in recent decades, leading to them spending more on credit to get the lifestyle they want.
Such is the claim of a new report by the Trades Union Congress (TUC), which analysed the economy and pay rates between 1978 – the last full year before the election of Margaret Thatcher – and 2008, when the recession began.
It said that during this time, the economy doubled in size but people on low incomes only saw a 27 per cent increase in wealth, while middle earners were up 56 per cent.
By contrast, the organisation argued, a small elite of top earners have seen their remuneration surging ahead of the rest, with doctors’ pay up 153 per cent, whole lawyers gained 114 per cent.
Only the borrowing of “unsustainable” consumer credit managed to disguise the situation over this period, the report argued, with TUC general secretary Brendan Barber claiming: “The financial crash has exposed decades of limp wage growth, offset by soaring household debt.”
While the TUC used the research to attack “market capitalism” and its effects on income distribution, the issue of the debt some may have taken on to try to boost their lifestyle is an issue that may most concern those who owe large amounts.
Recent pay rates have lagged behind inflation, with figures from Incomes Data Services for the three months to April showing median pay rates at three per cent.
This figure represents a real terms pay cut, as consumer price index inflation is running at over four per cent.
By Joe White