the Business Forum and
the Economic Partnership
in Brighton & Hove
Homepage    BCRP Intranet    Funding    Events    Knowledgebase    Links    About us     Contact us
Key projects
Crime
reduction
 


Inward
investment
information
 


Licensee
Forum
 

Workforce development 

Transport
 

Business &
climate
change

Property &
Development sites

Business
Improvement
Districts

Housing
 

Strategy
 

Consultation opportunities
 

Brighton & Hove Business Forum
8-11 Pavilion Buildings, Brighton, BN1 1EE
Tel: 01273 735442
Email: info@brighton
business.co.uk

© Brighton & Hove
Business Forum

News - 30 December 2013

Workers need a pay rise to sustain the recovery.

As even the CBI urges its members to give salary increases to workers the Economic Partnership urges local businesses to give serious consideration to the Living Wage if it wants to avoid the recovery petering out in 2014.

Some of those people that attended the recent Economic Partnership debate on happiness vs economic growth were surprised to learn that the drivers of the UK economy (indeed any economy) number only four; private sector consumption (far and away the largest contributor), public sector spending, net exports and business investment.

So far the UK recovery is driven entirely by consumption – people spending money, despite the fact that they have considerably less of it to spend [about 15%] than they did five years ago thanks to inflation and wage restraint. Almost certainly the recent increase in house prices has made people feel richer and somewhat more confident about the future although, thankfully, they have not returned to the heady days before the banking crisis when 70% of the growth in the economy was based on mortgage equity withdrawal – people increasing their mortgages to buy new cars and holidays etc. This suggests that today’s consumer boom is based on either people spending their savings or increasing their debt.

Although most recoveries start with an increase in consumer spending (inevitable given that this represents nearly two thirds of the economy) this can’t sustain a recovery. The other three factors have to kick in to keep the ball rolling. Notwithstanding the government’s recently announced infrastructure building programme, public sector spending is unlikely to be the catalyst that delivers long term growth. At a local level, Brighton & Hove City Council has to find about £25m of savings from their £700m budget every year for the next five years; a situation repeated all over the country. Public sector spending is going to decline markedly and the other two elements of GDP – exports and investment – are going to have to take up the slack.

In theory, people spending more should increase demand for goods and services and encourage businesses to invest in new products, new machinery, new systems etc to become more productive to supply the increased demand. UK businesses are sitting on a mountain of cash but so far they have been extraordinarily reluctant to spend it because, unlike consumers perhaps, they don’t yet believe that the recovery is solid. The longer they keep on thinking that way the less likely it is to become solid. Investment spending is 24% below its 2007 level.

Of course, the other element of GDP is net exports [the value of exports minus the value of imports] but exports are moving in completely the wrong direction with the most recent figures being among the worst for twenty years. Exports may eventually help but not any time soon; for the moment it is essential that business investment kicks in and quickly, certainly before the end of 2014.

For that to happen people need to continue to spend money to engender confidence in the future but spending their savings or increasing debt is not sustainable. For their own benefit, businesses need to start paying better wages. In Brighton & Hove there really isn’t a better time for them to lead the way and start paying the Living Wage.


Read related items on:
Disposable income
Economic growth
Inflation
Productivity
Brighton & Hove Economic Partnership
CBI


Browse our business Knowledgebase or search by keyword


Headlines

15 December 2017
Brighton is among the best places to start a business due to their strong growth factors
15 December 2017
GTR consultation ends 20th Dec 2017 13 December 2017
Ethical Food StartUp Programme - Idea Generation Workshop 12 December 2017
Utilise Plus launch programme of energy efficiency grants and business support for SMEs 11 December 2017
City Centre Vacancy Rates Drop Slightly From Sept 5 December 2017
Innovate UK Announces Sector Competitions in Manufacturing and Infrastructure Systems 5 December 2017
GDPR, steps to early compliance 1 December 2017
The 29th Sussex Business Awards 2017 Winners Announced 1 December 2017
Old tech gear? Give IT a new lease of life 29 November 2017
Driving for Better Business Campaign launches 29 November 2017
ARKA Funerals sponsor Burning the Clocks 2017 with 'In Memory' lanterns 27 November 2017
Govia Thameslink launches third consultation phase on once-in-a-generation timetable restructure 23 November 2017
Coast to Capital Launches Brighton Mainline Alliance 22 November 2017
Calling all UK companies that have transport, parking and commuting issues to address 15 November 2017
Start-up Challenge Business Competition Offering £10,000 Investment to Young Entrepreneurs 15 November 2017
IUK Announces £10 Million Innovation Loans Infrastructure Systems Funding Competition for UK SMEs 15 November 2017
Sussex Food and Drink Grand Finalists Celebrate Success 10 November 2017
Meaning conference confirms speaker line-up: breeding a new army of business activists 10 November 2017
Positive body image documentary screening at Hove school 8 November 2017
Material Practices: Painting and Printmaking at the University of Brighton - Private View 8 November 2017
Economic Partnership kick starts city strategy consultation 8 November 2017
GTR respond to positive ASLEF referendum result 7 November 2017
350th employer signed up to the Brighton & Hove Campaign 7 November 2017
Rampion announces £4 million community fund 6 November 2017
The First Gamification Conference comes to Brighton 3 November 2017
Shoreham Port Welcomes New Commercial and Operations Director 2 November 2017
Burning the Clocks launches Crowdfunder for 2017 2 November 2017
The Gatwick Diamond Business Awards are now open for Entries 31 October 2017
Brighton Based Paxton Open New Centre for Technology & Innovation 27 October 2017
Adventures in risk taking for high growth businesses 27 October 2017
Can your business benefit from offering a 'world of work' experience? 27 October 2017
The Small Business Saturday Bus Tour launches across the UK for its fifth year 24 October 2017
Business Networking & Case Study Visit with the Sustainable Business Partnership 24 October 2017
Could you use an Energy Saving Workshop? 17 October 2017
Peter Blake raffle raises £2,290 for Middle Street School 17 October 2017
AMEX named major sponsor of city's bike share scheme 16 October 2017
Ropetackle Business Friends scheme 4 October 2017
VIRGIN STARTUP MEETUP 'HOW TO TELL (SELL) YOUR STORY' 3 October 2017
BTN BikeShare: a successful first month 3 October 2017
PLATF9RM open at Hove Town Hall