Poor households in Britain are £4,300 worse off than their counterparts in France and Germany – but the problems with stagnation started long before the cost of living crisis.
Resolution Foundation’s Ending Stagnation report points to 15 years of stagnation as the driver behind Brits’ troubles with flatlining wages and a toxic combination of high inequality and slow growth hitting low and middle-income families hard.
But a combination of expanding Britain’s great cities, public and private investment, prioritising good work and boosting benefits could see the country catch up to others, according to the think tank’s collaboration with London School of Economics’ (LSE) Centre for Economic Performance.
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Torsten Bell, chief executive of the Resolution Foundation, said: “Britain has huge strengths, but is in relative decline. A year or two of low investment and flatlining wages is survivable, but 15 years of stagnation is a disaster. Combined with high inequality, our slow growth has proved toxic for low- and middle-income families, who are now far poorer than their peers in similar economies like Germany and France. Their living standards were under strain well before the cost-of-living crisis struck.
“The task facing the UK is to urgently embark on a new path. A new economic strategy built, not on nostalgia or wishful thinking, but our actual strengths. Along with honesty about the scale of change needed, and the trade-offs involved. It’s time for Britain to start investing in our future, rather than living off our past.”