UK economy grew by more than previously estimated during first quarter

According to the Office for National Statistics (ONS), the UK economy grew by 0.7% between January and March 2024, up from the previously estimated 0.6%. Growth in the UK services sector was a significant contributor to this increase.

This positive news follows a decrease in the UK’s inflation rate to its lowest level in almost three years, with the Consumer Prices Index (CPI) rising by 2% in the year to May 2024, down from 2.3% in April. Despite this, prices are still increasing, albeit at a slower pace since July 2021.

David Bharier, Head of Research at the British Chambers of Commerce (BCC), noted:

“The data is a further sign that the UK is exiting the inflation crisis which began in late 2020. It provides additional weight for an interest rate cut in the coming months, something which will be welcomed by firms of all shapes and sizes. Our research has shown that a steadily declining number of businesses are concerned about inflation from a record peak of 84% in mid-2022. This is positive news, but prices are not falling, just rising more slowly, and the economic outlook remains challenging.”

Source:

• BCC website
• CBI website

Real average earnings barely higher than in 2010

Research from the Resolution Foundation indicates that real average earnings are merely £16 a week higher than they were 14 years ago. This prolonged pay squeeze has been influenced by several economic shocks, including the financial crisis, the Brexit referendum, and the cost-of-living crisis.

Hannah Slaughter, Senior Economist at the Resolution Foundation, explained:

“Britain’s prolonged pay depression has left average earnings just £16 a week higher than they were back in 2010, despite the welcome return of rising real wages in recent months. Worryingly, Britain’s decade-long jobs boom during the 2010s has also gone bust, with the UK one of only a handful of countries where employment has yet to return to pre-pandemic levels.”

Source:

• BCC website

Savers dangerously underestimating minimum cost of retirement

Research from pension provider PensionBee reveals that UK savers are significantly underestimating the minimum amount needed for retirement. A survey of 1,000 working-age UK adults found that 23% were unsure of the required pension pot size to achieve their desired retirement income.

PensionBee highlighted that, according to the Pensions and Lifetime Savings Association’s (PLSA) Retirement Living Standards, a pension pot of £150,000 would only fund an individual’s minimum retirement standard for ten years. Many working-age adults may be underestimating the true cost of retirement.

Becky O’Connor, Director of Public Affairs at PensionBee, noted:

“It’s hard to plan for retirement without an idea of how much you might need, yet most Brits seem to be unaware of – or worse, dangerously underestimate – the true cost of retirement. A good pension pot is one that can provide enough money for the duration of retirement. As this exact amount will vary based on individual circumstances, pension calculators can be a helpful tool in setting financial goals and adjusting behaviours to achieve them. However, one rule is broadly true: the earlier individuals start paying into a pension, the more likely they are to be able to afford their desired lifestyle as their pension has longer to grow and the amount they’re required to save each month reduces.”

Source:

• IPPR website

Michelle Martin

Managing Director | Accace Adept

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