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TUC: UK suffered the highest inflation and lowest growth in the G7 in the last two years

UK families “clobbered” by the highest price rises in the G7 as economy barely grew

  • Conservative failures have “deepened the cost of living crisis”, says union body 

  • Years of stagnation left workers’ “brutally exposed” to soaring energy and food bills 

  • Household spending way down on historic trends, analysis shows 

The UK suffered the highest inflation and lowest economic growth of any G7 country since the end of 2021 (when interest rates began to be raised) according to new TUC analysis published last week (Friday). 

The analysis shows that over this period UK prices shot up by 14.2% while the economy grew by just 0.4%. 

The TUC described the UK’s economic performance as “dismal” compared to other leading economies. 

From the fourth quarter of 2021 to the fourth quarter of 2023 (the latest period for which comparable data is available): 

  • Across the G7 inflation increased by 10.7% on average, while economic growth increased by 2.7% on average  

  • Across the Eurozone inflation increased by 13%, while economic growth increased by 2% on average  

  • Only five countries in the OECD (Chile, Czechia, Estonia, Lithuania and Sweden) have done worse than the UK on both inflation and growth. 

  • Most OECD countries (19 of 37) have done better than the UK on both GDP and inflation.  

The analysis also shows that countries with higher growth did better, on average, at dealing with the effects of the shock to global prices.    

The TUC highlighted the example of Joe Biden’s Inflation Reduction Act which provided much-needed stimulus for the American economy. 

The US suffered lower inflation (10.6%) and enjoyed much higher economic growth (3.8%) than the UK between the end of 2021 and the end of 2023. 

Years of economic stagnation 

The TUC says that despite the first quarter of 2024 showing a decent increase in GDP, the Conservatives are presiding over the worst period for growth in modern history. 

The austerity measures introduced by the government in 2010 led to annual growth of just 1.2%, on average, between the start of the global financial crisis and 2019. 

And since the pandemic UK annual growth has been just 0.7% on average – the worst since the 1920s. 

Lack of spending power 

The TUC says the Conservatives’ failure to grow the economy over the last 14 years – coupled with over a decade of wage stagnation – has deepened the cost of living crisis. 

The union body pointed to families’ lack of spending power. 

Between the end of 2021 and the end of 2023 UK household spending increased by just 0.25% a year – way below the UK historic annual average of 2.5%. 

Over the same period: 

  • Average annual household spending in the OCED increased by 1.85% - rising at seven times the rate of the UK. 

  • Average annual household spending in the G7 increased by 1.3% - rising at five times the rate of the UK. 

The TUC says workers’ inability to spend in their local economies has acted as huge drag on growth. 

”Shredded” family budgets 

The TUC says family budgets have been “shredded” by the last 14 years of stagnating living standards. 

Real wages in the UK are still worth less than in 2008 across the vast majority of the UK. 

And if pay had kept pace with pre-crisis trends, the average UK worker would be earning over £10,000 a year more.  

TUC General Secretary Paul Nowak said:  

“The Conservatives have nothing to boast about on the economy. 

“UK households have been clobbered by the highest price rises in the G7, while growth has tanked compared to other countries. 

“Make no mistake – the Tories have deepened the cost of living crisis for millions. 

“The reason why so many families have struggled to make ends meet and spend in their local economies is because of years of wage stagnation and years of dismal growth. 

“It beggars belief that 14 years on from the final crisis, pay packets are still worth less than in 2008. 

“People shouldn’t have to worry about affording their weekly shop or paying their bills. But many have seen their disposable incomes squeezed to breaking point by 14 years of Tory failure.” 

Editors note

The analysis uses OECD country data to compare CPI inflation and GDP growth between 2021Q4 (when interest rates were first rates in the UK) and 2023Q4 (the last quarter with GDP data available for all OECD countries).  The table below extracts the results for G7 countries. Stronger UK growth figures for the first quarter will not change the broad picture over this longer period. 

Changes in inflation and economic growth Q4 2021-Q4 2023 

Country 

growth  

inflation 

United Kingdom 

0.4 

14.2 

Countries with higher growth and lower inflation than the UK Q4 2021-Q4 2023 

Country 

growth  

inflation 

Germany 

0.7 

12.4 

France 

1.5 

10.0 

Switzerland 

1.8 

4.6 

Euro area (20 countries) 

2.0 

13.0 

Japan 

2.00 

6.8 

New Zealand 

2.0 

12.2 

Netherlands 

2.3 

12.1 

Norway 

2.6 

11.5 

Italy 

2.6 

12.8 

G7 

2.7 

10.7 

Belgium 

2.9 

12.0 

Canada 

3.1 

10.1 

Denmark 

3.4 

9.7 

Korea 

3.6 

8.8 

United States 

3.8 

10.6 

Australia 

4.0 

12.2 

Greece 

5.5 

11.9 

Portugal 

5.5 

11.7 

Spain 

5.9 

10.1 

Mexico 

7.2 

12.8 

Costa Rica 

9.5 

6.7 

Changes in household consumption (spending) Q2021-Q4 2023 

Country 

% change in household spending 

OECD average 

3.7% 

G7 

2.5% 

UK 

0.5% 

- About the TUC: The Trades Union Congress (TUC) exists to make the working world a better place for everyone. We bring together the 5.5 million working people who make up our 48 member unions. We support unions to grow and thrive, and we stand up for everyone who works for a living. 

Original article link: https://www.tuc.org.uk/news/tuc-uk-suffered-highest-inflation-and-lowest-growth-g7-last-two-years

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