Everything is relative, so comparing UK economics to other trends around the world offers clues about what’s really happening at home. Between landmark Brexit and Scottish votes and the unexpected economic push fueled by UK consumers, it is an active time for social, financial, and political issues – each impacting your personal finances. With so much at stake and steady change unfolding across the world, things could be worse for UK residents. Yet it may surprise you how the UK measures up on the economy, health care costs, housing concerns and other related issues.
The economy is always an important concern for UK residents, but uncertainty following the election and other factors make economic issues more visible than ever before. Despite ranking among the top five largest economies in the world, the UK economy grew less than 2 per cent during 2016. But lots of Britons are employed, which can’t be overlooked. Analysing these and other points of comparison can help regulators and individual citizens shape their financial strategies.
Looking at GDP, in dollars, Britain doesn’t exactly shine among the top producers. The US scores highly at close to $60,000, while the UK and France hover around $44,000. And when growth levels are compared, the UK, even at less than 2 per cent growth, stacks up better than most countries. The US experienced about 2.3 per cent growth during the same period.
An unanticipated mix of events propped-up the British economy after residents voted to part with the EU. As healthy spending levels have reinforced and stabilised some aspects of the economy, others have lagged, resulting in a mixed bag of financial fortunes. In terms of economic performance, wage growth has been among the biggest losers, leaving consumers with less disposable income to pour back into the economy. The impacts of slow growth rise closer to the surface as inflation continues ticking upwards. Looking at real wages, an important economic measure, leaves the UK at about $41,000 average annual earnings per person.
Employment and Wages
UK employment numbers remain reasonable, with less than 5 per cent of the workforce unemployed. The figure mirrors trends in the US, doing better than some European nations such as France, which has experienced dismal 2017 unemployment numbers near 10 per cent.
Even though employment figures could be much worse, the Office of National Statistics reports a rise in the number of workers employed with zero-hour contracts, providing none of the benefits of conventional jobs. And another sizable group of employed earners are on short-hours contracts, which may only guarantee a few hours of work per week. The stark contrast between healthy-sounding employment statistics and real-life personal financial struggles leaves many workers in the balance – with a job, yet without the income mobility to advance their financial goals. In some cases, full-time workers cannot make ends meet.
Numerous short-term financing options furnish relief when earnings falter. But while it is nice to know you have borrowing options – even without a credit check; real wage growth to back-up strong employment numbers would benefit Britain’s vulnerable workforce. Earnings inequality is also on the rise in Great Britain, mirroring global trends.
The US ranks among the worst major economies in terms of income inequality, but the UK is not far behind. According to this important measure of economic health, the gap is widening between the UK’s wealthiest and poorest residents. It is never a good sign when mobility rises for one group at the cost of another. Although global income inequality is at its highest level in decades, many UK residents would like to see the new government lead the way, closing the income gap between haves and have-nots.
A mixed bag of economic performance points to an uncertain future for British employees. Compared to other advanced nations, the UK work force has a lot going for it, including strong employment numbers. Without growth, however, British workers may not see meaningful wage growth.