Video tutorial: The Economist’s Philip Coggan on how low economic rise impacts financial wellbeing

Speaking at the REBA FinWell Forum where he presented a keynote address on the UK economy, he said a lot of companies were in Britain since they felt it was a good base for trading in the EU and didn’t understand the decision to leave. He explained long term growth equals more workers and more productivity. However his analysis showed that the UK has struggled to make itself more productive. He also looked at the impact of immigration on wages but said that since 2004 the effect of immigration had reduced wages by around 1% in total.

A squeeze on real wages has meant that in Britain in-work poverty has been increasing, particularly amongst those that are self-employed. “Even in full-time employment the proportion of people in poverty has increased,” he said. A lack of engagement, and active disengagement, was also causing problems, he said.

The impact on personal finances has been significant as a result, with a reduction in savings – down to below 5%, amongst the lowest level in the past 50 years, “The underlying problem is that they don’t have enough spare income, so the household debt has started to head up and is going to continue going up,” he said.

However for those that are saving he said there was some good news, with fees coming down on saving. There were also more people in work than ever before, he said. Looking longer term a combination of falling immigration and an aging population could mean that real wages have to rise, according to Coggan, however he said political risks remain. "In the long run we normally muddle through but it will be more challenging in your jobs to deal with your workers if you find that this period continues and we have low growth and very slow rises in prosperity.”

This video was recorded at the REBA FinWell Forum, held in London on 7 March 2019.