"The lack of wage growth is a concern for both retail and the UK economy," says Rachel Lund, head of retail insight and analytics from the BRC

"The lack of wage growth is a concern for both retail and the UK economy," says Rachel Lund, head of retail insight and analytics from the BRC

The British Retail Consortium (BRC) has urged Chancellor Philip Hammond to do "all he can" next week to support UK consumers with a budget for shoppers as pay growth falls behind.

The call follows the release of the ONS Labour Market data published yesterday (15 November), which revealed pay growth still shows little sign of keeping up with inflation.

According to Rachel Lund, head of retail insight and analytics from the BRC, the lack of wage growth is a concern for the UK's retail sector.

"While there are signs that the rate of job creation is now slowing, with total numbers employed falling in Q3 from Q2, the unemployment rate held at a record low of 4.3%.

"However, more important to consumer spending is pay growth, which still shows little sign of keeping up with inflation."

Lund notes the 2.2% earnings growth in the three months to September still leaves UK households wages falling in real terms. "That means budgets in the run up to the festive period will be stretched and retailers will have little choice but to compete harder in what is already one of the most competitive markets in the world," she explains.

"The lack of wage growth is a concern for both retail and the UK economy. The Bank of England and other forecasters, have consistently expected an imminent pick up in wage growth and been disappointed."

The BRC reported that this time last year the Bank expected growth to reach 2.75% by the end of the year. Two years ago it was forecast at 4%, and now it is expected at just 2.25%. "Even the relatively sober picture for the outlook for the UK economy is predicated on a pick up in wage growth next year," says Lund.

"While reports by the Bank's agents suggest higher pay growth might be in the pipeline, if activity doesn't pick up businesses may not be in a position to put those pay increases in place," she warns. "So we urge the Chancellor to do all he can next week to support UK consumers with a budget for shoppers."

Last month, the BRC sent a submission to the Chancellor calling on the Government to support consumer spending in the upcoming Budget and help increase the amount of UK manufacturing of textiles and clothing.

Retailers call for consumer support in Budget