Despite recovery, wages could take 6 years to reach pre-recessionary levels

Britain’s economy could reach its 2008 pre-crises levels as early as the third quarter this year, but despite the recovery, wages are forecast to lag behind by as much as six years.

The National Institute of Economic and Social Research (NIESR), a think tank, upped its growth forecast for 2014 from 2% to 2.5%, with GDP set to hit its pre-recession peak by the end of the year.

However, current wages are stuck at 2004 levels, and it could take until 2020 for wages to reach their 2009 peak, at which point it will begin to “feel” like a recovery, according to NIESR.

Simon Kirby, principal research fellow at the think tank said: “Real consumer wages … are currently 8% below what they were at their peak at the end of 2009. So while the UK economy is expected to pass through its pre-recession peak this year, there’s still a number of years yet before we expect real consumer wages to regain their recent peak.”

“It’s a long way off,” he added. “It will take a number of years before people actually start to feel the recovery.”

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