Chancellor of the Exchequer Jeremy Hunt is set to unveil sweeping tax rises (Victoria Jones/PA)
(Picture: PA Wire)The great squeeze on people’s pay packets continued on Tuesday as official figures showed the biggest quarterly drop in real earnings since the financial crisis.
Data from the Office for National Statistics revealed that while average total pay actually grew by 6 per cent between July and September, it fell by 3.7 per cent once the benchmark CPI measure of inflation was taken into account. When it came to regular pay — which excludes bonuses — there was a real terms fall of 3.8 per cent on the year, the ONS added.
While this was slightly smaller than the record fall in the second quarter of the year, it remains one of the largest falls since records began in 2001.
The latest gloomy economic data came ahead of the release of October’s inflation figure tomorrow and after it was confirmed last week that the UK economy is sliding towards a lengthy recession following a 0.2 per cent fall in GDP in the third quarter. CPI inflation hit 10.1 per cent in September.
On Thursday Chancellor Jeremy Hunt is set to unveil sweeping tax rises and department spending cuts to try and plug a £55billion black hole in the public finances.
Today it emerged that the Chancellor may offer some good news to the country’s poorest households by giving fresh targeted support on energy bills to those on benefits and a 10 per cent increase in the minimum wage.
But he has already made it clear he will have to make “eye-wateringly difficult” decisions on taxes and spending as he looks to balance the books.
“I appreciate that people’s hard-earned money isn’t going as far as it should,” Mr Hunt, below, said. “Tackling inflation is my absolute priority and that guides the difficult decisions on tax and spending we will make on Thursday.
“Restoring stability and getting debt falling is our only option to reduce inflation and limit interest rate rises.”
But Labour’s shadow chancellor Rachel Reeves said: “Real wages have fallen again, thousands of over-50s have left the labour market and a record number of people are out of work because they’re stuck on NHS waiting lists or they’re not getting proper employment support.
“What Britain needs in the Autumn Statement on Thursday are fairer choices for working people, and a proper plan for growth.”
The latest pay data is likely to raise fears of further strike action, with nurses set to join rail workers and postal workers in taking industrial action over pay later this year.
Today the ONS revealed that over half a million working days were lost to strikes between August and September, the highest two-month total in more than a decade.
Meanwhile, unemployment rose in the UK rose to 3.6 per cent in the three months to September, up from 3.5 per cent in the previous three months.
