Struggling wages are manageable when your house is a cash machine. But the young don’t have that option, says Ben Walker…
One of the key battlegrounds in the upcoming general election will be the cost of living.
The Conservative message is that Britain is bouncing back, with higher employment, low interest rates and falling inflation.
Labour don’t think it’s as simple as that – and are pushing the line that while many more people might be in some sort of job than were in the aftermath of the financial crisis, those jobs are of lower quality, less fulfilling, and worse paid.
The art of politics is to pull out figures that suit your own case – accountants prefer hard numbers.
They arrived, in part, this morning in the form of an IFS study that showed that real wages – (salaries adjusted for the fact that prices rise over time) have fallen since 2001, when Britain was booming and the very idea of a financial crisis was the stuff of distant history or warped fantasy.
The report shows that all age groups have seen a slump in real wages since those heady days and – more important to the mechanics of the election campaign – since the Coalition came to power in 2010.
[quote style=”boxed”]The fear might be that Britain is splitting – not so much on geographical or social lines, as generational ones[/quote]
The worst hit were young people, who have become trapped in economic treble whammy of high rents, few assets, and falling wages. Set that against a backdrop of spiralling house prices (they rose around 10% last year, and a mind boggling 15% in London, meaning Londoners’ whose house was worth £400,000 in January made £60,000 by Christmas in unearned assets). Despite their stuttering salaries, homeowners, thanks to record low interest rates and rocketing home equity, can turn their houses into capital-raising cash machines.
The fear might be that Britain is splitting – not so much on geographical or social lines, as generational ones. Perhaps the next big challenge for government – whatever its shade – will be to bridge the gap between Generation Rent and the homeowners of Generation X and the Baby Boom, who are awash with rising assets and high on cheap money.
Are times getting tighter? Do you think the generations are growing apart financially?
Ben Walker is editor of Accounting Technician magazine
Ben Walker is the former editor of Accounting Technician.