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Australia risks repeating Britain’s two decades of stagnation
Falling real wages and stagnant productivity threaten to turn Australia’s temporary living standards slump into a long-term British-style crisis.
The five-year erosion of Australians’ real incomes risks hardening into the same prolonged stagnation that has plagued Britain for nearly two decades – and unleashed its populist right-wing politics. Bethany Rae
Anthony Albanese called Andy Burnham this week to congratulate the new British prime minister, but beneath the warm feelings and kind words, both Labo(u)r leaders seem to underestimate the sheer scale of the economic challenge ahead.
As inflation eats away at real wages on both sides of the globe, the response from London and Canberra looks remarkably similar: both centre-left prime ministers are falling back on an old economic playbook from the 1970s.
Australia on track for weakest living standards growth in more than a century
Australia is facing its weakest decade of living standards growth since the 1910s, with GDP per person rising just 4 per cent so far this decade amid stagnant productivity, high inflation and weak wage growth.
Former Reserve Bank governor Philip Lowe warned the prolonged decline was âthe fundamental economic problem the country facesâ and said Australia needed major policy changes to encourage businesses to invest, expand and hire.
âOur living standards have stagnated, there has been no net growth in per capita incomes for seven or eight years â thatâs after per capita income rising 1.5 per cent a year for nearly three decades,â Lowe said.
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