UK economy no longer leading to rising earnings

The UK economy no longer translates economic growth into rising earnings, a new report has found.

The Interim Report of the IPPR Commission on Economic Justice proposes ‘fundamental reform’ of the British economy. It sets out new analysis which shows that average earnings per employee have fallen by 6 per cent even though GDP per head has risen by 12 per cent since 2010.

Since the 1970s the share of national income which has gone to wages has gradually declined by 13 per cent while the share going to profits has increased. The wage share is now the lowest it has been since World War Two.

Overall, the report finds that the economy is no longer raising living standards for a majority of the population.

The commission is calling for an urgent public debate on taxation, the role of the finance sector, the power of trade unions and the market dominance of digital companies.

Tom Kibasi, IPPR director and chair of the commission on economic justice, said: “The British economy needs fundamental reform. We don’t have a British economic model. We have an economic muddle. The persistent economic problems we have experienced since the 2008 financial crash won’t be fixed with a bit of tinkering. There is a growing consensus across business, trade unions and civil society that a radical new approach is now needed. Change should be guided by a new vision for the economy, where long-term prosperity is joined with justice for all. We want to see the widest public debate possible on our analysis and proposals.”