The pound’s post-referendum plummet and employer uncertainty over Brexit is biting household budgets, new analysis shows.
Analysis by the Guardian newspaper found that price increases coupled with weak wage growth are causing living standards to fall.
Since the EU referendum last June the pound has fallen 10 percent against the Euro. Inflation in February and March was 2.3 percent, higher than the Bank of England’s 2 percent target.
Despite rising prices, wage growth looks set to stall as the public sector pay freeze and Brexit belt tightening amongst private employers continues. In February wage growth was 1.9 percent, compared to an inflation rate of 2.3 percent.
Signs that the economy is beginning to struggle because of a fall in consumer spending were evident from the latest retail and leisure industry indicators, which suggest that both sectors are feeling the pinch.
Exports have failed to make up for a fall in domestic spending, the analysis showed, while GPD figures set to be released this week are expected to show that economic growth slowed considerably at the beginning of the year.
Former Bank of England policymaker, David Blanchflower, said: “Support for Brexit is likely to be driven by how the economy performs and whether living standards hold up and they aren’t.”
To read the Guardian’s analysis click here.