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PwC has forecasted that UK real wages in 2023 are set to fall back to 2006 levels, which could see British workers overtaken by French counterparts in G7.
House prices are set to decline by 8%, and sales to fall below one million for first time in a decade with the UK set to see record fall in happiness levels and spike in divorces in 2023.
More than 300,000 workers will return to labour market in 2023 with increased immigration set to contribute £19bn to GDP. French workers could overtake their British counterparts as the fourth-best paid workers in the G7, as UK real wages fall back to their 2006 levels, according to PwC’s economic outlook for 2023.
PwC has forecast that cost of living pressures will continue to intensify through 2023, with the weekly food shop rising to £100, double the rate at the turn of the century. The housing market is also facing a challenging outlook with house prices set to decline by 8% – the second sharpest fall in seventy years – while the number of house sales could fall below one million for the first time in a decade.
In addition to economic indicators, PwC’s analysis also forecasts two significant social milestones may be reached in 2023. Firstly, the UK population may record the lowest levels of happiness since records began in 2013, driven primarily by high inflation rates and rising unemployment, although it may start to increase again in 2024.
Secondly, the number of divorces will spike by one-fifth to almost 140,000 in England and Wales, equivalent to 16 divorces every hour. The increase in divorces is expected to be driven primarily by the introduction of no-fault divorces in April 2022, although the report cautions that it may take up to two years for any impact from current economic conditions to become apparent in population data.
Barret Kupelian, Senior Economist, PwC said “2022 has obviously been a highly challenging year of the UK economy, and it is not surprising that these chilly headwinds will continue throughout 2023, bringing with it some unwelcome milestones in terms of economic and social well being measures. While UK real wage growth has been sluggish since the Global Financial Crisis, inflationary pressure will see UK workers face a significant hit to their wages in comparison to their peers in France.”
“Yet it is important to stress there are signs of light at the end of the tunnel. Our expectation is that inflation reached its peak rate in October 2022, and will gradually begin to return to target over the next two years. Yet the UK economy will still be experiencing a period of high cost of living pressure, which will have a number of social as well as economic impacts – with experience from the previous financial crisis suggesting they may be felt for some years to come.”
