Post-Brexit Inflation May to Return UK to Pay Squeeze in 2017- Think Tank

MOSCOW (Sputnik) – Wage growth in the United Kingdom is expected to fall to around 1 percent in the three months to January due to the likely falls in the real earning growth and increased inflation, leading to a "pay squeeze" similar to the one felt two years ago, the Resolution Foundation think tank said Wednesday.

"With inflation forecast to continue rising we project real earnings growth hovering around, or even below, zero for the second half of the year. A return to the pay squeeze we thought we had left behind in 2014 is a real risk," Torsten Bell, Director of the Resolution Foundation said in the report.

Bell also stated that while employment growth was at a record high level (75 percent), there was no indication that there would be continued growth in 2017. Stagnated employment growth will weaken household incomes, leading to living standards anxiety in the New Year, Bell added.

In June, the United Kingdom voted in a referendum to leave the European Union. Soon after the referendum, UK Prime Minister Theresa May said the country would trigger the Article 50 of the EU Lisbon Treaty by the end of March 2017, thus beginning withdrawal negotiations.