UK wages poised to pass recovery milestone

Mon Apr 14, 2014 2:03am EDT
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By William Schomberg

LONDON (Reuters) - Britain's recovery from its deepest recession in decades looks set to pass a milestone this week when a six-year run of declining living standards is expected to show a turnaround.

An end to the erosion of earnings by inflation will be a welcome change for Prime Minister David Cameron as the May 2015 national election approaches, even if it will take several more years to repair the damage caused by the financial crisis.

Figures due on Wednesday are expected to show that average weekly earnings, the most widely watched measure of pay, picked up speed to rise by 1.8 percent in three months to the end of February, according to a Reuters poll of economists.

That would edge earnings above the 1.7 percent rise in the consumer price index in February. Data on Tuesday is likely to show the CPI fell further to 1.6 percent in March.

Analysts say the trend looks to be reverting back in favor of earners after Britain's economy picked up speed over the last year and unemployment fell fast. Higher income would help ease concerns about a reliance on debt to fuel consumption.

Prices have been rising faster than pay almost continually since the start of the financial crisis in 2008, with the exception of a few months that were affected by one-off factors.

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So this week's numbers are likely to give Britain's finance minister George Osborne a chance to build on his increasingly upbeat tone about the economy, even as he sticks to his other core message of more painful spending cuts in the years ahead.   Continued...

A sign for Bank Street and high rise offices are pictured in the financial district Canary Wharf in London in this October 21, 2010 file photo. REUTERS/Luke Macgregor/Files