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UK GDP Prospers but Salaries Suffer

UK GDP Prospers but Salaries Suffer

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Julian Parker

As preliminary portions of information are released in the lead up to The Bank of England’s quarterly report this week you will find the, unfamiliar, words ‘UK’, ‘Growth’, ‘Recovery’ and ‘Pre-crisis’ in the same headline. 

Many of the general and Finance specific news outlets are reporting a figure of 0.8% growth for GDP in Q2 2014, with growth forecasted to be above 3% year-on-year for the first time since 2007. Analysis and commentary from the Government, Think Tanks and the Recruitment industry mention that the effects of this growth are now being translated in to the employment market. Job creation is on the rise to the extent where skills shortages are beginning to appear within the highly skilled labour market. 

Whilst only being initial estimates, we are told this is the positive news we have all been waiting for. Economically the country is doing much better; which is fantastic news for us all…right?

At face value the economy is in a much healthier place but under further scrutiny our initial positivity may need to be tempered. The growth in population over the past 7 years means that GDP per capita is actually lower than 2007, and more significantly still, the output per hours worked is reported to be frighteningly low. 

So what does all this mean? 

It means without real economic growth British business may be hiring once again but the starting salaries for new employees remain stagnant and there is very little chance of current employees having any significant pay review. 

Whilst the Financial headlines spell positivity it seems there is more road to be travelled before financial betterment is universally felt within the UK job market and in our pockets.