In his speech at the Conservative Party conference this week, Boris Johnson declared war on the UK’s “broken” economic model. After a decade of stagnating wages, he pledged to transform the UK into a “high-wage, high-skill, high-productivity economy”.
The prime minister is right to point out Britain’s dismal record on pay. Real average weekly earnings – earnings after inflation is taken into account – are barely any higher today than they were in 2008. Following the global financial crisis, real wages suffered their longest sustained decline on record, and have begun to slowly regain ground only in recent years. For those at the lower end of the income distribution, who rely on benefits to support earnings, the situation is even worse: before the pandemic hit, real incomes for the lowest income households were no higher than in 2001-02, thanks to years of sustained welfare cuts.
In one sense, the prime minister’s assault on the UK’s economic performance is somewhat surprising. After all, it is his own Conservative Party that has been directly responsible for economic policy for the past decade. For years, Tory leaders have told us that their ‘long-term economic plan’ is working and that theirs is the only party that can be trusted with the economy. But now we are being told that the UK's economic model is in fact "broken".
