Consumers face wages squeeze

Industry News | 24/06/19

People are likely to cut back on their spending as wage growth slows, dampening a key driver of the economy, a report has suggested.The EY Item Club expects consumer spending growth to slow from 1.8 per cent in 2018 to 1.6 per cent in 2019 and 1.7 per cent in 2020. A robust labour market and a period of sustained wage growth have supported consumer spending, but EY said that the outlook for consumers was going to be “relatively challenging over the next two years”.
According to official figures, wages rose by 1.5 per cent in the three months from February to April, compared with a year ago, and have been growing more quickly than inflation for 15 consecutive months. At 76.1 per cent, the employment rate is the highest since records began in 1971. However, EY said that earnings growth would start to drop off and that employment growth would slow from 1.2 per cent in 2018 to 1 per cent in 2019 and 0.6 per cent in 2020.

Source: The Times