Brexit Britain is being outstripped by Slovenia and Malta

Real incomes in most European countries are growing faster than the UK - and our poorest households are losing out

Steve Anglesey

To call this year’s UK Living Standards Review a sobering read is an understatement. The findings of this annual deep-dive are enough to make Patsy Stone, Father Jack Hackett and the Withnail acting family take up Dry January.

The National Institute of Economic and Social Research (NIESR) has found that the poorest households in the UK are now worse off than the poorest in Slovenia and Malta. Living standards in the wealthiest bits of the UK are comparable to those in other wealthy countries like France and Germany, but if you were to rank each of 269 European regions in terms of income, the poorest German region would rank 82nd – well above the EU average – and the poorest UK region 193rd – well below the EU average.

Want to sober up a bit more? Real incomes in the majority of European regions have grown at a faster rate than those in the UK. Since 2020, the year of the pandemic but also of our official departure from the EU, we have fallen behind the average real wage growth of developed countries.

At the turn of the millennium, we had broadly similar wage levels to Norway and Canada, which has since outstripped us. We were well ahead of New Zealand (which overtook UK wages in 2020) and Slovenia (which is set to do so in the next few years). Meanwhile, had UK wages grown as they did in the US after the 2008 financial crisis, UK workers would be £4,300 better off today.

The NIESR is getting some stick for not naming Brexit as a direct cause of some of the UK’s problems in this report. In fairness, it does note how membership of the European Union’s single market has helped growth in some eastern European countries. And the NIESR did publish a big report on Brexit’s effects on the UK just 16 months ago which said that the damage to GDP was at 2-3% of GDP in 2023 and would rise to 5-6% of GDP by 2035.

This new report makes some short-term recommendations about easing our standard of living crisis – including removing the two-child limit for child benefit – that make for interesting reading as Labour mull cuts to the welfare budget. But in the longer-term, it seems clear that a game-changer is needed to break the spiral of low pay and low growth.

Most of us agree on what that game-changer should be, but not everybody. A recent column by the Brexiteer Telegraph journalist Allister Heath began with two sentences that made the NIESR report seem cheerful: “Britain stands alone in a brutish world. Our small, impoverished yet special nation has spent too long lying to itself”. Heath then stated, correctly, that the US was now a write-off.

But some people can’t see the obvious when it is staring them in the face. “Europe isn’t the answer,” wrote Heath. “The EU is an imperialist technocracy with an obsession with Hegelian dialectics and a hatred for traitor-nations that have thrown off the shackles of the acquis communautaire.”

To which the only correct responses are a) “Parklife!” and b) pass that bottle this way, I need a drink.

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Brexit Britain is being outstripped by Slovenia and Malta