British pay growth lagged inflation for the first time in two-and-a-half years in early 2017, underscoring the growing Brexit squeeze facing many households. David Pollard reports.
It was a spirited double act .... Theresa May and her finance minister together as they spoke on the upcoming UK election. And tried to lay to rest rumours of a rift between them. SOUNDBITE (English) BRITISH PRIME MINSTER, THERESA MAY, SAYING: "As Philip says we've worked together over the years. For many years, longer than we would care to identify. I think that's an age-related comment. Nothing else. Just in case you try and relay anything into that ... (LAUGHTER)." But a bigger challenge could be: defending their performance on an economy under pressure. UK workers have now suffered their first pay squeeze since 2014. SOUNDBITE (English) BRITISH FINANCE MINISTER, PHILIP HAMMOND, SAYING: "Judge us on a track record, our track record of creating 2.8 million new jobs, of reducing the deficit by nearly three quarters, of increasing pensioner incomes by over a thousand pounds a year." For UK workers, not all those claims convince. Productivity is down. And, adjusted for inflation, pay actually fell 0.2 per cent in Q1. Teaching assistant Donna says her income is so low, half her wage goes on rent. SOUNDBITE (English) DONNA SPICER, TEACHING ASSISTANT, SAYING: "It's a choice of heating and eating. So one winter, it was sitting there with blankets, hot-water bottles, jackets jumpers. And a very blue nose." In fact, British households are in the biggest squeeze on finances in nearly three years, according to another survey. And the Bank of England says consumer spending is slowing. As inflation - now at 2.7 per cent - rises on a Brexit weakened pound. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "We've got real earnings now being eroded. poor consumers that spend a larger proportion of their income on items such as food, their real incomes have been dragged lower for a longer period." Even so, unemployment is at record lows. The overall 4.6 per cent rate a 42-year best. This economy a glass half full for some - if half empty for others.