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26 May 2015


Deborah Souter,
Head of Content,

The impact of real increases in earnings appears to be beginning to feed through to households.

The latest VocaLink FTSE 350 Take Home Pay Index data shows that the annual rate of take home pay growth across the UK’s private sector increased marginally in the first quarter of 2015.

The index increased by 2.1% in the first three months of 2015 compared with the same period of 2014, a marginal acceleration from the 2.0% annual growth recorded in the final quarter of last year.

However, while the economy expanding at a relatively robust rate in 2014, take home pay growth has slowed over the past year. Annual growth in Q1 2014 peaked at 3.1% but has since fallen as low as 1.4% (three months to September 2014) before recovering to its current level.

Despite continued increases in the personal allowance, the amount an individual is able to earn before being charged income tax, growth in take home pay remains well below pre-crisis levels. Earnings growth should rise as the remaining slack in the labour market is diminished but low inflation over the next year, reducing the pressure on firms to raise wages, may offset this.

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