The perception of Britain as a wealthy nation may not reflect reality anymore. A recent report by the National Institute of Economic and Social Research (NIESR) claimed that some parts of the UK are now worse off than the poorest areas of Slovenia and Malta.
"The poorest households in Slovenia and Malta are now better off than those in the UK," the report states, attributing this decline to stagnating real incomes since the 2008 financial crisis. While other European countries have seen steady income growth, the UK has fallen behind.
Weak Wages and Insufficient Welfare
The UK ranks among the least generous welfare providers in the OECD. According to the report:
Housing affordability has also worsened. Less than 5% of private rental properties are now accessible on housing benefits, compared to 20% in 2020. The freeze on housing benefit rates, while rental prices surged, has made accommodation increasingly unaffordable.
Declining Living Standards and Stagnant Productivity
The report describes the UK as "neither a high-wage nor high-welfare country." Weak wage growth and cuts to welfare spending have restricted the two main sources of living standards.
Productivity stagnation has significantly impacted earnings. If UK wages had grown at the same pace as in the US post-2008, British workers would be £4,300 richer per year. The report also highlights that:
Productivity weakness has directly contributed to wage stagnation over the past 15 years.
Countries with stronger productivity growth throughout the 2010s saw the highest wage increases.
One of the most cost-effective ways to reduce poverty, according to the report, would be removing the two-child limit on benefits. This single policy change could lift 1.7 million people out of poverty at a lower cost than other comparable policies aimed at improving living standards.
"The poorest households in Slovenia and Malta are now better off than those in the UK," the report states, attributing this decline to stagnating real incomes since the 2008 financial crisis. While other European countries have seen steady income growth, the UK has fallen behind.
Weak Wages and Insufficient Welfare
The UK ranks among the least generous welfare providers in the OECD. According to the report:- The UK sits in the middle of OECD nations in terms of welfare spending as a percentage of GDP.
- It ranks third lowest for welfare value, measured as a percentage of average wages.
- Welfare payments have only covered essential costs in two of the last 14 years, with the exception of the pandemic-era Universal Credit uplift of £20 per week.
Housing affordability has also worsened. Less than 5% of private rental properties are now accessible on housing benefits, compared to 20% in 2020. The freeze on housing benefit rates, while rental prices surged, has made accommodation increasingly unaffordable.
Declining Living Standards and Stagnant Productivity
The report describes the UK as "neither a high-wage nor high-welfare country." Weak wage growth and cuts to welfare spending have restricted the two main sources of living standards.Productivity stagnation has significantly impacted earnings. If UK wages had grown at the same pace as in the US post-2008, British workers would be £4,300 richer per year. The report also highlights that:
Productivity weakness has directly contributed to wage stagnation over the past 15 years.
Countries with stronger productivity growth throughout the 2010s saw the highest wage increases.
One of the most cost-effective ways to reduce poverty, according to the report, would be removing the two-child limit on benefits. This single policy change could lift 1.7 million people out of poverty at a lower cost than other comparable policies aimed at improving living standards.
