UK workers have suffered the biggest fall in their real pay for nearly nine years as the cost-of-living crisis tightens, according to official figures.
The Office for National Statistics (ONS) said regular pay excluding bonuses tumbled 1.8 per cent in the three months to February when taking soaring inflation into account - the steepest fall since August to October 2013 - as measured by the Consumer Prices Index (CPI)
The ONS said real pay was now “falling noticeably”, with figures for February showing regular wages dropped 2.1 per cent after inflation, which was the biggest drop since August 2013, the ONS added.
While pay rose 4 per cent in the quarter, it was far outstripped by inflation and experts have said wages will lag even further behind rising prices this year as inflation is expected to rocket in the autumn.
Chancellor Rishi Sunak said the government was “helping to cushion the impacts of global price rises through over £22 billion of support for the cost of living this financial year”.
But business groups said households and companies were already coming under strain from eye-watering price hikes, while Labour hit out at the government’s move to press ahead with this month’s tax rises.
Pat McFadden, Labour’s shadow chief secretary to the Treasury, said: “Rishi Sunak could have chosen a one-off windfall tax on huge oil and gas company profits to cut household energy bills by up to £600.
“Instead, he’s decided to make Britain the only major economy to land working people with higher taxes in the midst of a cost-of-living crisis.”
The latest ONS labour market data also revealed the unemployment rate fell further below levels seen before the pandemic struck, at 3.8 per cent in the three months to February, which is the lowest reading since December 2019 and down from 3.9 per cent in the previous three-month period.
There were 86,000 fewer jobless Britons at 1.3 million in the quarter to February, while those in employment rose 10,000 to 32.5 million.
More timely pay as you earn (PAYE) data showed there was another rise in the number of UK workers on payrolls last month, up by 35,000 between February and March to 29.6 million.
But this was the smallest monthly increase since February last year, while vacancies also saw the smallest rise since February to April 2021, up 50,200 at a record 1.29 million in January to March.
And a shrinking labour market, due mostly to older workers choosing to retire early throughout the pandemic, has also seen those classed as economically inactive rise by 76,000 in the quarter to 8.9 million.
Darren Morgan, director of economic statistics at the ONS, said: “While unemployment has fallen again, we are still seeing rising numbers of people disengaging from the labour market, and as they aren’t working or looking for work, are not counted as unemployed.
“Early estimates suggest there was only a small increase in the number of employees on payroll in March, while job vacancies, although again at a record high, rose at their slowest for nearly a year.
“While strong bonuses continue to mitigate the effects of rising prices on people’s total earnings, basic pay is now falling noticeably in real terms.”
The figures come amid forecasts that inflation, already at 6.2 per cent, will peak at nearly 9 per cent this autumn, with official data on Wednesday set to show another steep rise in the CPI.
The latest data from the ONS marks the calm before the storm, ahead of April’s energy cap rise, council tax bills increase and the national insurance contribution rise.
The UK’s economic forecasters, the Office for Budget Responsibility, recently said households will suffer the biggest fall in real incomes since records began in 1956, with a drop of more than 2.2 per cent this year.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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BUNDESLIGA FIXTURES
Saturday, May 16 (kick-offs UAE time)
Borussia Dortmund v Schalke (4.30pm)
RB Leipzig v Freiburg (4.30pm)
Hoffenheim v Hertha Berlin (4.30pm)
Fortuna Dusseldorf v Paderborn (4.30pm)
Augsburg v Wolfsburg (4.30pm)
Eintracht Frankfurt v Borussia Monchengladbach (7.30pm)
Sunday, May 17
Cologne v Mainz (4.30pm),
Union Berlin v Bayern Munich (7pm)
Monday, May 18
Werder Bremen v Bayer Leverkusen (9.30pm)
The specs: 2017 Dodge Viper SRT
Price, base / as tested Dh460,000
Engine 8.4L V10
Transmission Six-speed manual
Power 645hp @ 6,200rpm
Torque 813Nm @ 5,000rpm
Fuel economy, combined 16.8L / 100km
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
A timeline of the Historical Dictionary of the Arabic Language
- 2018: Formal work begins
- November 2021: First 17 volumes launched
- November 2022: Additional 19 volumes released
- October 2023: Another 31 volumes released
- November 2024: All 127 volumes completed
Should late investors consider cryptocurrencies?
Wealth managers recommend late investors to have a balanced portfolio that typically includes traditional assets such as cash, government and corporate bonds, equities, commodities and commercial property.
They do not usually recommend investing in Bitcoin or other cryptocurrencies due to the risk and volatility associated with them.
“It has produced eye-watering returns for some, whereas others have lost substantially as this has all depended purely on timing and when the buy-in was. If someone still has about 20 to 25 years until retirement, there isn’t any need to take such risks,” Rupert Connor of Abacus Financial Consultant says.
He adds that if a person is interested in owning a business or growing a property portfolio to increase their retirement income, this can be encouraged provided they keep in mind the overall risk profile of these assets.
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Sholto Byrnes on Myanmar politics
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
LA LIGA FIXTURES
Friday
Granada v Real Betis (9.30pm)
Valencia v Levante (midnight)
Saturday
Espanyol v Alaves (4pm)
Celta Vigo v Villarreal (7pm)
Leganes v Real Valladolid (9.30pm)
Mallorca v Barcelona (midnight)
Sunday
Atletic Bilbao v Atletico Madrid (4pm)
Real Madrid v Eibar (9.30pm)
Real Sociedad v Osasuna (midnight)
England squad
Goalkeepers: Jordan Pickford, Nick Pope, Aaron Ramsdale
Defenders: Trent Alexander-Arnold, Conor Coady, Marc Guehi, Reece James, Harry Maguire, Tyrone Mings, Luke Shaw, John Stones, Ben White
Midfielders: Jude Bellingham, Conor Gallagher, Mason Mount, Jordan Henderson, Declan Rice, James Ward-Prowse
Forwards: Tammy Abraham, Phil Foden, Jack Grealish, Harry Kane, Bukayo Saka, Emile Smith Rowe, Raheem Sterling
The five pillars of Islam
Pari
Produced by: Clean Slate Films (Anushka Sharma, Karnesh Sharma) & KriArj Entertainment
Director: Prosit Roy
Starring: Anushka Sharma, Parambrata Chattopadhyay, Ritabhari Chakraborty, Rajat Kapoor, Mansi Multani
Three stars
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