 Outlook for UK Households, the Devolved Nations and the English RegionsArnab Bhattacharjee, Adrian Pabst, Max Mosley and Tibor Szendrei National Institute UK Economic Outlook, 2023, issue 10, 44-64 Abstract: The poorest households are around £4,000 per year worse off as a result of Covid-19 and the cost-of-living-crisis: this shortfall represents around 24 per cent lower incomes driven mostly by low wage growth not offsetting the impact of inflation, in particular high food and energy bills along with increased housing costs. Helping the hardest hit households will require bold policy changes: the existing targeted support in the form of the Cost-of-Living Payment should be complemented by public sector wage settlements that reduce the gap with private sector wage growth and a new energy policy that combines the Social Tariff Discount with a Variable Price Cap. The regions hardest hit by the cost-of-living crisis had the highest levels of unsecured debt prior to the cost-of-living crisis: the Midlands, Scotland (particularly Glasgow), the North East and Northern Ireland saw the largest hits to household finances, and these were the households with the highest levels of personal loans in the fourth quarter of 2021. No devolved nation or English region has experienced a recession and almost all parts are seeing robust levels of employment: but economic growth is low and – with the exception of London, the metropolitan parts of the South East and larger cities – productivity growth is flatlining. The poor economic performance in the Midlands relative to the United Kingdom is likely a consequence of the high concentration of firms affected by post-Brexit trade restrictions with the European Union: while much of the United Kingdom has returned to pre-pandemic levels of growth and employment, parts of the Midlands are seeing output, productivity and employment levels fall. Sustained regional regeneration will require a new approach to public investment: a new simplified system for disbursing Levelling Up funds for suburban, rural and coastal areas is needed, in addition to greater levels of investment overall. We suggest public sector net investment amounting to 3 per cent of GDP over the OBR's forecast horizon (rather than the government's current plan of about 2 per cent) would go some way towards filling the gap. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesra:i:10:y:2023:p:44-64 Access Statistics for this article More articles in National Institute UK Economic Outlook from National Institute of Economic and Social Research 2 Dean Trench Street Smith Square London SW1P 3HE. Contact information at EDIRC. |
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