Real Wages Shrank More In The Past Five Years Than Any Other Period Since Victorian Times

You may think things are looking up in the UK. You'd be wrong. Just take a look at our nation's GDP. It is 6% lower than it was in 2008. How does that

In the past, British labourers generally insisted on maintaining rising pay. When recessions hit this meant cutting jobs, rather than reducing pay.

With the recent major recession things played out differently. A number of factors including globalisation, the fall of unions and a more conservative fiscal policy led to workers to accept a reduction in pay in return for keeping their jobs.

The plus side of this is that unemployment stayed below rates seen in previous recessions. At it's highest in 2011, unemployment reached 8.4%. This is considerably lower than the peaks of 10.7% we saw in 1993. At present the unemployment rate is at 6.5%. I should point out this includes self employed and part time workers, but it is still a vast improvement on previous years.

Annual wage inflation (excluding bonuses) is down to the lowest level on record at 0.7%, and is well below the overall CPI inflation of 1.9%

The real measure of all this is of course the relationship between wages and inflation, and the cost of living. The numbers here are less rosy. The fall in 'real' wages between 2009 and 2013 of 8% is more drastic than any other period going as far back as 1864.

Where do we go from here? Many have speculated that the real wage growth we have enjoyed in the last few decades was the exception rather than the rule. That is to say, there is no real reason to expect a return to a consistent 2.5% increase plus inflation as was the case since the seventies.

Other economists say that the pressures of globalisation might mean that the long term trend could be closer to 1% increase plus inflation, perhaps even less.

National Grid Looks To The Continent In Its Time Of Need

National Grid recently made clear its intentions to import more electricity from Europe as part of new measures to maintain Britain's power supply and reduce consumer energy bills.

The company said that British consumers would stand to save £1 billion annually as a result of buying cheaper electricity from power stations in continental Europe. National Grid also warned that electricity prices in Britain would remain higher than elsewhere in Europe, where heavy investment in renewables such as solar and wind is continuing to bring prices down.




Energy secretary, Ed Davey, Ofgem, and several energy companies have backed proposals to boost the number of interconnectors, which supply Britain with electricity from the continent.

National Grid revealed in August that it will peruse emergency measures to fend off a full blown energy crisis in the coming two years. This is a result of extremely low energy reserves, estimated to be as low as 2 percent.

The group is also promoting new incentives to big businesses to turn off machinery and lights at peak hours in order to help ease the strain on the network. These measures are entirely optional but National Grid hopes they will go some way to helping alleviate the looming energy crisis.



The government is offering incentives to customers to lower their energy usage as a cheaper alternative to building new power plants. Ministers believe that such measures have the potential to save energy equivalent to that produced by 22 power stations by 2020.

Chief executive of National Grid, Steve Holiday, said that these incentives will become increasingly important as new solar and wind farms are brought on line, to cover the natural lulls in renewable energy production. He added "It is the world we are beginning to move into".

The first subsidies offered to energy companies will be held in December by capacity auction. Energy companies that participate must agree to build new power stations or use their own incentives to save an amount of energy equivalent to that which a power station would generate. These new subsidies are intended to replace the emergency reserve set up by National Grid.

The chief strategy officer of Flextricity, Alistair Martin said that due to the complex structure of the proposed scheme, it is more likely that the big six power companies will opt to build more power stations, despite it being the more expensive option.

“The Big Six’s business models mean that it’s hard for them to get involved in energy consumers’ habits. The details of the scheme have come out more their way than the consumers’ way,” he said.

Chief executive of OfGem, Dermot Nolan said: “The Department of Energy has gone through endless amounts of pain to make sure it works smoothly. But the proof is in the pudding.”

Asda Edges Ahead Of Rivals In The Price War

Disparity in the UK is widening according to Asda chief executive, Andy Clarke. He reports that shoppers in south east England are far more willing to spend on food shopping than those in the Northeast and Northern Ireland.

Quarterly figures show that Asda is winning the price war with Morrisons and Tesco, edging past them with a 0.5% increase in like-for-like sales in the second quarter of 2014.

Mr. Clarke is quick to point out the disparities between the north and the south. "It feels very different in London than in Northern Ireland or the northeast. If you're a family on a budget in those difficult regions, it still feels very challenging out there."

Asda enjoyed a 0.14% increase in market share during the second quarter. The supermarket giant is the second largest in the UK, behind Tesco and just ahead of Sainsbury's. It is the only supermarket of the big four in the UK which is currently gaining market shares and sales. In contrast, Asda's parent company, Walmart have just disclosed details of a disappointing performance in the US with a reduced profit forecast for the year.

Walmart's profits will likely take a further hit with the introduction of President Obama's healthcare reforms. Chief Executive of the chain, Doug McMillon admitted that trading had been "challenging" in recent years. "We need to see stronger comp (comparable sales) in Walmart US and Sam's Club, but both reported flat comp sales.

Britain is one of Walmart's largest overseas markets. Despite the tough climate, Asda is performing better than it's competitors including discounters such as Aldi and Lidl. Just as their advertising campaigns simply state, the company has moved away from promotional offers and loyalty cards in favour of "everyday low prices". Asda's chief executive said he was keen to abandon pricing gimmicks and concentrate on permanent low prices. He added "We're pleased with our market share growth during the quarter."

Asda also said that it's clothing line, George, has been performing very well. Boosted by strong sales of school uniforms, it is now the second best selling range in the UK behind only Primark.

According to public figures listed at Companies House, Asda bosses received £800,000 less in salary and £600,000 less in bonuses from shares. The biggest hit by the cuts was the boss himself, Andy Clarke, who saw his salary including share payout reduced to £440,000.

National Grid To Pay Firms To Use Less Power

National Grid recently announced that it has signed deals with Tata Steel, Flexitricity and 429 other companies, agreeing to pay them to use less power at peak times.

The company, which runs Britain's supply network said the agreement would give it the "tools it needs to balance the power of the grid"

Peak time is defined as between 16:00 and 20:00 on weekdays from November through to February.

Fears have been raised of power shortages due to unexpected plant shut-downs, as a result of these new agreements.

National Grid has so far contracted 319 mega watts of what it has dubbed "Demand Side Balancing Reserve" at 431 sites in the United Kingdom. As and when needed, plants will reduce their demand on the grid, or switch to their own generators. In return, they will receive compensation from the National Grid.

Last month, National Grid said it would be expediting emergency plan asking providers how much additional electricity they could supply in the event of a shortfall, following a recent string of unforeseen problems at various power plants.

A few months ago, National Grid stated that the emergency plan would not be needed this year. That prediction has since changed, following fires at E.On's Ironbridge and SEE's Ferrybridge power plants, and provisionary checks at EDF's Heysham and Hartlepool nuclear plants, following a serious of problems.

The UK is facing a real reduction in the domestically produced power, due to an ageing population of power plants that are slowly shutting down, and the speed, or lack thereof, of new ones starting up.

Rising Power Bills Number One Concern For SMEs

A recent report has revealed that cost of electricity is now the biggest challenge facing small businesses today, overtaking securing finance and the burden of red tape.

Of 2000 companies surveyed, Citizens Advice found that 46% of small business owners expressed concern over the cost of electricity, in contrast, only 16% were more concerned about accessing finance.

Chief executive of Citizens Advice, Ms Guy said: "Regulators, firms and business groups need to pay far greater attention to the ways in which these markets meet the needs of small business."

Small businesses lack the market power of their medium and large business counterparts to negotiate good deals. Greater focus needs to be placed on problems facing smaller companies in dealing with the giants of the power and telecom industries, the charity said.

Investigations into Britain's leading Energy firms has been launched by the competition watchdog after a report from regulator, OfGem. Ms Guy added that, with pressures affecting homeowners as well as businesses, the investigation needed to consider whether the market was working for all consumers.

The confederation of British industry said the government needed to do more to help support small businesses, but also noted that SMEs and business at large needs to be more energy efficient.

A spokesperson for CBI stated “As the economy recovers, businesses still face significant challenges, with rising energy prices an increasing concern. Energy efficiency can help businesses to manage these costs and the Government must ensure that small businesses have the support they need.”

SME owners are often not aware that they have all the same rights as domestic energy users, should they find themselves in difficulty. Struggling SMEs should not be afraid of seeking advice and exploring all available options.