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The data shows that average total pay, including bonuses, was up 5.1% between April and June, while regular pay excluding bonuses grew by 4.7%. 

However, when accounting for inflation, which reached 9.4% in June, total pay dropped 2.5%, with regular pay down by 3%. The decline, which is the quickest since records began in 2001, has hit many UK households hard.

In a comment, ONS director of economic statistics Darren Morgan said: “The number of people in work grew in the second quarter of 2022, whilst the headline rates of unemployment and of people neither working nor looking for a job were little changed. Meanwhile, the total number of hours worked each week appears to have stabilised very slightly below pre-pandemic levels.”

“Redundancies are still at very low levels. However, although the number of job vacancies remains historically very high, it fell for the first time since the summer of 2020.”

“The real value of pay continues to fall. Excluding bonuses, it is still dropping faster than at any time since comparable records began in 2001.”

Official figures by the Office for National Statistics (ONS) show that GDP dropped 0.1% during the three months to the end of June, a significant step down from the first quarter of the year when GDP increased by 0.8%. In June, GDP was down 0.6%. 

The ONS reported that the country’s service sector was hit particularly hard, falling 0.4% over the quarter. 

In a comment, ONS director of economic statistics Darren Morgan said, “With May’s growth revised down a little and June showing a notable fall, overall the economy shrank slightly in the second quarter.”

“Health was the biggest reason the economy contracted as both the test and trace and vaccine programmes were wound down, while many retailers also had a tough quarter.

“These were partially offset by growth in hotels, bars, hairdressers and outdoor events across the quarter, partly as a result of people celebrating the Platinum Jubilee.”

The Bank of England has warned that the UK may enter into a recession later in 2022 and believes this could be the longest economic downturn since the financial crisis of 2008.

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The ONS put June’s inflation figure partly down to a 42% year-on-year increase in petrol prices.

Last month, average petrol prices stood at 184p a litre, up 18.1p since May alone. Diesel, meanwhile, increased by 12.7p to 192.4p a litre.

Food and non-alcoholic drinks were up 9.8% in the year to June, the highest rate since March 2009. 

Grant Fitzner, chief economist at the Office for National Statistics (ONS), commented: “Annual inflation again rose to stand at its highest rate for over 40 years.”

“The increase was driven by rising fuel and food prices, these were only slightly offset by falling second-hand car prices.”

“The cost of both raw materials and goods leaving factories continued to rise, driven by higher metal and food prices respectively.”

“These increases saw raw materials post their highest annual increase on record, with manufactured goods at a 45-year high.”

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According to data from the Office for National Statistics (ONS), the UK imported £206 million of goods from Russia in May, a figure down 16% from the £244 million imported in April and 90% lower than in February.  

The sanctions also saw crude oil imports hit £0 in May from $59 million in April and £99 million in February. 

Following Russia’s unprovoked invasion of Ukraine in late February, Europe, the US, and other nations have imposed a series of tough sanctions against Moscow and this has severely impacted the Russian economy. 

However, many European countries are still struggling to boycott Russian fossil fuels, particularly gas, as this makes up a major proportion of the energy supply for many. 

Back in March, German economic and energy minister Robert Habeck warned, “If we flip a switch immediately, there will be supply shortages, even supply stops in Germany.”

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According to the most recent data from the Office for National Statistics (ONS) on Wednesday, the consumer price index (CPI) measure of inflation rose to 9%, the highest it's been since calculations began in 1997. Additionally, the ONS estimates that CPI hasn’t been higher since 1982 when it peaked at around 11%. This is up from a 30-year high of 7% seen in March.

Chancellor of the Exchequer Rishi Sunak commented, "Countries around the world are dealing with rising inflation. Today’s inflation numbers are driven by the energy price cap rise in April, which in turn is driven by higher global energy prices.”

"We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action," the chancellor continued. 

According to the Office for National Statistics (ONS), consumer prices rose by 6.2% year-on-year in February after a 5.5% rise in January. This is its highest rate since March 1992. 

The UK now has the second-highest annual inflation rate among Group Seven countries, behind only the US which hit a four-decade-high of 7.5% in January of this year. 

The ONS pointed to UK household energy bills, which were up almost 25% on a year ago, and petrol as the biggest drivers of February’s price hike. The ONS also warned that food prices were rising across the board in a further blow to low-income households.

The UK economy has shown relative strength during the last few years, but we can expect more pressure if the rising commodity (energy, food, agriculture) costs are not tackled soon enough, as well as if the planned increase in National Insurance goes ahead,” commented Lecturer in Finance Dr Nikolaos Antypas. 

Overall, we should expect measures to minimise the unavoidable economic suffering for the most vulnerable UK residents instead of net positive measures for all socioeconomic strata.”

Except it hasn’t been like that. Not even a little. The UK is in the midst of its “weakest decade for pay growth since the 1930s”, according to a report by the Resolution Foundation, a think tank. Meanwhile, the cost of living in the UK is at its highest since September 2011, according to the Office for National Statistics (ONS). Then there’s inflation. This almost hit a 30-year high of 5.4% in December. But the great compounder of peoples’ travails is the energy crisis. In 2021, a typical home was paying around £1042 for gas and electricity per year, in April – when the price cap changes – that figure is likely to increase to £2000.

Crises require collaboration

People are hoping that governments, central banks, and energy companies will step in with measures to alleviate the spate of issues facing households. The chancellor's announcement to provide a repayable £200 discount on bills and a further £150 council tax rebate for most homes in England will serve as some comfort, but the majority will still face a shortfall. Is the right solution for people to quietly struggle? Of course not. As the situation worsens, we might anticipate a wave of radical creativity and activity from citizens. We know from experience that catastrophes are mobilising moments, they spark new thinking, collaboration, and help knit society together.  Consider the pandemic – a single emergency inspired 436,000 people to join the NHS Volunteer Responders Programme. The service reckons these people carried out about 2-million covid-associated tasks. Then there was all the clapping and banging of saucepans in the street to celebrate the efforts of health workers - crises are traumatic, but they unite.

Take the power back

It’s easy to see how citizens might mobilise in response to covid – delivering essentials to quarantining neighbours, staffing a vaccine centre, or just being conscientious when it comes to handwashing and mask-wearing. But the issues at hand require more thought. What can people do in response to soaring energy prices and inflation? The answer might lie in the rise of a consumer-centric energy market. We are currently seeing the first phase of this with a year-on-year increase in solar panel installations. There is room for growth, as of 2020, 970,000 UK homes are using them, according to government figures – that’s only 3.3% of the country. Further along, it’s possible that citizens will tire of paying huge prices to huge companies and opt for creating energy themselves. This could see the birth of localised power co-operatives, where energy is produced peer-to-peer. New, low-cost and easy to use technologies will be key to making this revolution happen in the coming years. 

In the short term, the UK is staring down the worst set of circumstances since the financial crash of 2008. But if government inaction and industry stagnation lead to an era when people are more conscious of their own collective power for social change, the twenties might roar at last.

About the author: Matt Hay is the founder and CEO of Bulbshare, a company on a mission to solve the world's biggest social and commercial problems through the power of community collaboration.

According to the most recent data from the Office for National Statistics (ONS), wage growth came in at 3.6%, down from a previous 3.8%, ramping up pressure on incomes amid the cost of living crisis.  

Wage growth lagged behind inflation, which reached 5.4% in the 12 months to December. By April, this figure is expected to hit 7% amid the lifting of the energy price cap. 

Allowing for recent rises in consumer prices, real total pay dropped in the year to October-December 2021. Excluding bonuses, average wages were down 1.2% — the biggest decline in nearly 8 years. 

The squeeze on firms’ finances from high inflation, soaring energy bills and the looming national insurance hike is likely to weaken job creation and further restrain pay growth in the coming months,” said Suren Thiru, head of economics at the British Chambers of Commerce.

With high economic inactivity indicating that many people have left the jobs market altogether, chronic staff shortages are likely to weigh on the U.K. economy for a sustained period.”

The ONS’ latest figures come as UK unemployment remained steady at 4.1% during the quarter, a figure which sits above pre-pandemic levels of 3.8%. The highest unemployment rate was in the North East of the country, at 5.6%. Meanwhile, the lowest was in Northern Ireland at 2.7%. 

Analysis of Office for National Statistics data by the TaxPayers’ Alliance has revealed that the lifeline tax bill for the average household in the UK is equivalent to 18 years of work. Meanwhile, the study showed that the bottom 20% of households with an income of £19,171 will need 24 years of income to pay their lifetime bill. 

The findings come as Prime Minister Boris Johnson and the Chancellor of the Exchequer Rishi Sunak are urged to reconsider a planned increase in National Insurance set to go ahead in April this year. However, last week, Johnson and Sunak defended the tax hike, arguing that it is vital for the country’s Covid-19 recovery. 

The study revealed that, even before the planned hike, the average UK household is set to pay close to £180,000 in employer and employee National Insurance contributions over a lifetime. 

Chief executive of the TaxPayers’ Alliance, John O’Connell, said: “With the tax burden at a 70-year high, typical families are now tax millionaires.”

Taxpayers already toiling half their working lives just to pay off the taxman cannot be asked to endure any further crippling tax hikes. Planned rises, like the national insurance hikes, must be scrapped.”

According to recent figures from the Office for National Statistics (ONS), real average weekly earnings dropped in November for the first time since July 2020, with basic pay without bonuses growing by 3.8% in the quarter to November. Average total pay including bonuses rose by 4.2%.

Meanwhile, consumer price inflation (CPI) jumped to 5.1% in November and is expected to reach as high as 6% in the spring as energy bills increase. Allowing for inflation, total pay was up by only 0.4%, while regular pay stayed level. 

From September to November, the average total pay growth for the private sector was 4.5%, but for the public sector, this figure came in at just 2.6%. 

Inflation has waged war on pay and in November, salaries actually slid once inflation was taken into account. This has piled on the pressure for those struggling through the cost of living crisis, and things are going to get even worse,” said Sarah Coles, senior personal finance analyst at Hargreaves Lansdown. 

Wage rises have been falling steadily since spring 2021. Annual rises peaked at this point at 7.3% for regular pay and 8.8% for total pay, thanks to the fact that during the previous spring, wages had plummeted during the first lockdown. Meanwhile, inflation has ramped up from below 1% in February 2021 to more than 5% nine months later. In November, with inflation at 5.1%, it overtook wages.”

According to the Office for National Statistics (ONS), gross domestic product (GDP) growth was revised from 1.3% to 1.1% in Q3. Performance from health industries and hairdressers was weaker and the energy sector contracted more in September than previous estimates had suggested.

Nonetheless, upward revisions to 2020 means GDP in the three months to the end of September was closer to pre-pandemic levels. It came in at just 1.5% below the final quarter for 2019, an improvement from the previous forecast of 2.1% below. It is now estimated that annual UK GDP in 2020 fell by 9.4%, compared with a previous 9.7% estimate. 

The largest contributors to the Q3 increase, in output terms, were the arts, hospitality, entertainment, and recreation as covid restrictions eased during the period. 

Production and construction, however, both fell, driven by weak electricity, gas, steam, and air conditioning supply following on from high levels in May 2021.

Between April and November, borrowing dropped to £136 billion, down nearly £116 billion in the same period of 2020, according to data from the Office for National Statistics. 

However, the figure was still nearly three times its level two years before, prior to the coronavirus pandemic. The Chancellor of the Exchequer, Rishi Sunak, is currently under pressure to come up with new measures to support the hospitality sector which has been hit hard by the emergence of the Omicron variant of the virus. 

"These data predate the recent surge in coronavirus infections caused by the Omicron variant, with a near-term tightening of virus restrictions once again a possibility," said Bethany Beckett of Capital Economics.

"Although the economy has got better at coping with restrictions with each new wave, we still suspect it would prompt a deterioration in the public finances via lower tax revenues and the potential reintroduction of government support schemes."

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