According to the Bank of England, UK households are facing the “biggest fall in living standards since comparable records began”. If you’re thinking ‘haven’t we heard this before?’, that’s because the UK has just experienced the worst decade for living standards since records began. To live through two ‘lost decades’ in a row is unprecedented in modern history. For young adults across Britain, rising living standards are now something they have encountered only in history books.
Although the ‘cost of living’ crisis has started to appear in the headlines only recently, it is anything but new. Struggling to make ends meet has been a reality for millions of households for many decades. With around a fifth of UK adults having less than £100 of savings in the bank, any sharp increases in the price of goods and services can mean having to choose between heating and eating.
To successfully tackle the cost of living crisis, we must first understand its root cause. The first culprit is a persistent problem of low pay. Real average weekly earnings – earnings after inflation is taken into account – are no 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.
