International Desk

The UK is set for five years of "lost economic growth", with the poorest hit hardest, a think tank has warned.

The National Institute for Economic and Social Research (Niesr) said a triple blow of Brexit, Covid and the Ukraine war had badly affected the UK economy.

It added that the spending power of workers in many parts of the UK will remain below pre-pandemic levels until the end of 2024.
The BBC has contacted the Treasury for comment.

The amount of money made by the UK economy, its gross domestic product - or all the goods and services produced - is not forecast to return to 2019 levels until the second half of next year, Niesr forecast.

This weak "stuttering growth" over a five year period has widened the gap between the wealthier and poorer parts of the country, the think tank said.

In London, real wages are expected to be 7% higher by the end of next year than they were in 2019 - whereas in regions such as the West Midlands they are forecast to be 5% lower, its analysts said.

Despite pay increases, high inflation has forced up prices and the rising cost of living has left households throughout the UK feeling squeezed.

Niesr forecasts that inflation, the rate at which prices rise, will remain continually above the Bank of England's 2% target until early 2025, meaning the cost of living will also continue to rise. Inflation is currently 7.9%.
It means that people's wages, when taking inflation into account, would be below the level they were before the pandemic until the end of next year in "many UK regions", the think tank said.

Prof Adrian Pabst, deputy director for public policy at Niesr, said low-income households would be hit hardest, with real disposable incomes in this group falling by about 17% over the five years to 2024.

"For some of the poorest in society, coping with low or no real wage growth and persistent inflation has involved new debt to pay for permanently higher housing, energy and food costs," Prof Pabst said.