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British workers' wages expected to be no higher in 2025 than they were in 2004

Workers will have seen two decades of stagnant wages 

Jon Stone
Political Correspondent
Thursday 05 January 2017 12:57 EST
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British workers will have barely seen a real pay rise since 2004
British workers will have barely seen a real pay rise since 2004 (Getty Images)

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The real wages of UK workers are expected to be practically no higher in 2025 than they were in 2004, a study by Cambridge University academics has warned.

A study of the impact of Brexit on the British economy found that salaries would be “only very slightly above” their level in 2004 – when new countries in Eastern and Central Europe joined the European Union.

The economists said they expected over two decades of practically stagnant wages – the equivalent of almost no increase in incomes between the Second World War and England winning the 1966 football World Cup.

Though reduced immigration from leaving the EU would likely put workers in a stronger position for wage bargaining, the models found, any gains would be undermined by high inflation resulting from the parallel depreciation of the pound.

“Immigration restrictions will provide the biggest shock to wage bargaining for over a decade,” the authors from the Centre of Business Research said. “Even so, we expect real wages to be broadly flat for the next decade.

“Nominal wages will keep pace with rising consumer prices but no more. Real wages in 2025 are expected to be only very slightly above the level in 2004 at the accession of the EU10 member states to the EU.

“It is only later that we expect lower migration to be associated with steady rises in real wages.”

The study also warned that any hit to economic growth from Brexit would likely kick in after 2020, when the next general election is scheduled to be held.

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