Average salaries to increase by £4k in next decade
Average total cash pay will rise just over £4k by 2024, according to a report looking at trends from the ICAEW/Grant Thornton Business Confidence Monitor (BCM). Now in its tenth year, the BCM has consistently predicted GDP growth as well as other key financial indicators.
Key findings from Shifting economic sands – Perspectives on the next decade, include:
The private sector to create over 250,000 jobs a year over the next 10 years
The UK unlikely to achieve the £1trn export growth target even in the best case scenario
Business investment to rise but not fast enough to make up for years of weak growth
A major feature of the economy recently has been the extended squeeze on real household incomes as pay growth lagged behind inflation in the prices of consumer goods and services. As employment strengthens businesses will begin to increase pay. Based on the long-term trend of BCM, average total cash pay will rise by £4,034 over the next ten years, but a return to pre-crisis trends would see pay grow by £10,340 over the same time.
Michael Izza, chief executive of ICAEW, said: “As a nation, we have a choice. We can stay on the existing path of low unsustainable growth with the underlying structural problems unresolved or chart a new direction towards prolonged prosperity. Concerns over the low business investment and widening trade gap will only be alleviated by building a more competitive economy with broad-based growth.”
The private sector is also expected to create over 250,000 jobs a year over the next 10 years to take total private sector employment to above 27m. This is against a background of further public sector job cuts likely after the next general election.
Despite recent upward revisions to forecasts and an increasingly strong performance for UK plc, future export growth remains modest. Under the most optimistic scenario of BCM trends, total UK exports would rise by £221bn to £752bn over the next decade. This would still only be 75% of the Chancellor’s target for exports to reach £1trn by 2020.
Capital investment has been weak after the economic crisis. On the base-case scenario, business investment rises by £29bn over the next 10 years – but this does not make up for years of weak growth and raises concerns over the UK’s productive capacity.
Over the last decade the ICAEW/Grant Thornton UK Business Confidence Monitor has provided a perspective into how businesses view the direction of the UK economy. It has also proved to be accurate as a forecasting tool when it comes to key performance indicators such as business turnover and employment growth. The 40,000 responses over the last 10 years has been the evidence base
For further information please go to icaew.com/bcm