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British wages will fall to 2006 levels next year, while house prices will fall and divorce rates will rise in 2023, making the UK a less happy place to live, according to forecasts.
Consultancy firm PwC said a look ahead to 2023 showed most measures of the UK’s economic and social performance were in reverse.
Wages adjusted for inflation will fall below those in France, ending a short period during the pandemic when earnings were high. Average real wages in the UK will fall from a peak of £36,330 in 2020 to £34,643 next year, PwC said. Meanwhile, in France, where inflation is much lower, real wages will only slip from £35,848 in 2021 to £35,462 in 2023.
Higher taxes are also expected to play a part in making 2023 more difficult for many, with the UK government set to freeze the income tax threshold again from next April while cutting energy subsidies.
An 8% fall in house prices will add to the gloom. Those who treasure the high value of their homes will be upset and those who could benefit will not be able to benefit due to high interest rates. The number of housing market transactions will fall below 1m for the first time in more than a decade, according to forecasts.
One result is that divorces in England and Wales will increase by 20% to around 140,000, according to PwC, equivalent to 16 divorces every hour, although the introduction of no-fault divorce in April 2022 will be an important factor in fueling the increase.
A key measure of life satisfaction is expected to fall to its lowest level since records began in 2013, as the cost of living crisis is linked to rising unemployment, bankruptcies and struggling public services. The happiness index will drop from a peak of 7.7. 7.3 in 2019 to 2023, the report said.
Barrett Kupelian, senior economist at PwC, said the UK economy had faced an “extremely challenging” year, and “it is not surprising that these headwinds will continue throughout 2023, bringing some unwelcome milestones in terms of measures of economic and social well-being”.
He said inflation is forecast to fall at the end of 2023, a more stable outlook for the global economy and an increase in immigration which will increase the number of skilled workers and add £19bn to economic output.
England’s women’s football team’s victory in next year’s World Cup, a good bet after recent performances and success at the Euros, will also lift the mood, the report said.
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