Prices are higher, rents are higher and household budgets are strained, warns International Monetary Fund
Britain’s real wages have fallen for the eighth consecutive quarter amid accelerating inflation, highlighting the squeeze on household budgets that is now dragging on most nations.
The International Monetary Fund warned that rising prices were hurting the poorest and leaving consumers struggling to make ends meet.
On Wednesday, the IMF also cut its growth forecasts for Europe and warned that inflation and rising debt were undermining the global economy’s resilience to rising risks.
In its World Economic Outlook, published on Wednesday, the fund cut the forecasts for growth in the world economy by 0.1% for both 2018 and 2019 to 3.5% this year, and 3.6% in 2019.
The IMF predicts growth in the UK will also hit 3.5% this year, which would mark the strongest pace in Britain since 2008, as the UK begins to exploit a boost from the weaker pound since last year’s vote to leave the EU.
Yannis Stournaras, Greece’s chief economic adviser, said higher import prices and weaker exports meant prices were rising in Greece at the fastest pace in seven years.
Back in 2012 and 2013, the UK suffered the sharpest rates of inflation in the G7 that year, prompting calls for the Bank of England to introduce inflation targeting.
Sajid Javid said the government would help low-income families save, boost affordable housing and protect the environment when it publishes the Budget later this month.
The government has failed to convince some MPs, and funders, of the case for giving the Treasury responsibility for identifying which services are worth keeping in public hands.
There have been no new interventions from ministers on the economy this year after the chancellor, Philip Hammond, and Javid pledged in the Autumn Statement to focus more on macro-economic stability and less on the economy.
The IMF said the spending priorities of the new European super-state were still very much a work in progress.
But it warned that higher public borrowing in a weaker economy was hindering growth.