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Chancellor Hails "Resilience Of UK Economy” Despite Fastest Pay Fall On Record

Chancellor Hails 'Resilience Of UK Economy” Despite Fastest Pay Fall On Record

The Chancellor Nadhim Zahawi has claimed today's jobs figures show how resilient the UK economy is in the face of the current crisis (Alamy)

3 min read

Nadhim Zahawi has defended new ONS pay and employment figures despite them showing the sharpest real-world drop to the value of wages in light of rising inflation.

The Office for National Statistics (ONS) said wages fell by 3 per cent on the year for the months between April and June because of spiralling prices.

While regular pay, excluding bonuses, grew by 4.7 per cent over the second quarter of 2022, the rate of inflation according to the Consumer Price Index hit a new 40-year record of 9.4 per cent in June – and is expected to peak at around 11 per cent later this year.

"The real value of pay continues to fall," ONS director of economic statistics Darren Morgan said. 

"Excluding bonuses, it is still dropping faster than at any time since comparable records began in 2001.”

But the Chancellor said the announcement, which also showed the number of UK workers on payrolls rose by 73,000 between June and July to 29.7 million, was testament to the “resilience of the UK economy”.

Zahawi said today’s stats “demonstrate that the jobs market is in a strong position”, calling the unemployment numbers “good news in what I know are difficult times for people”.

He added: “This highlights the resilience of the UK economy and the fantastic businesses who are creating new jobs across the country.

“Although there are no easy solutions to the cost-of-living pressures people are facing, we are providing help where we can. We are delivering a £37billion package of help for households through cash grants and tax cuts so people can keep more of what they earn.”

But the Resolution Foundation, a respected think tank on living standards, said their analysis of longer-term ONS and Bank of England pay data means people are now facing “the biggest pay squeeze in Britain since 1977”, while Labour’s shadow business secretary Ed Miliband called it “a very grim moment”.

“The scale of this pay pain is even deeper than official figures suggest too, as pay growth estimates are still artificially boosted by the effects of the furlough scheme last year,” Nye Cominetti senior economist at the Resolution Foundation said.

The government’s employment minister, Julie Marson, said today’s figures “show that the jobs market remains resilient”, but added that she recognises that “people are struggling with rising prices”, and highlights the £1,200 direct payments available for millions of low income households.

Labour’s shadow work and pensions secretary Jonathan Ashworth said: “Today we see yet another record fall in real wages, and further proof that the Tories have lost control of the economy.

“Because of the Tories’ failure on the economy, families face plummeting real wages and soaring energy bills. Yet, this zombie government is offering no solutions to the cost-of-living crisis.”

Liberal Democrat Treasury spokesperson Sarah Olney added: “Families are being hammered by a cost of living catastrophe and yet the government is nowhere to be found.

“This zombie government has no plan and is failing our country. People can’t wait any longer for the Conservatives to play out their horror show leadership contest.”

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