UK Workers 'To Be Better Off This Year'
After five long and "torried" years for hard-pressed UK families and consumers, things are finally starting to look up, says a group of leading economic forecasters.
The average earner will have £482 more to spend this year and £624 in 2013, according to the Ernst & Young ITEM Club.
Their report on consumer spending shows that wage growth will finally begin to outpace inflation, while pay packets will also be boosted by the tax changes announced in the Budget.
Provided oil prices continue to ease, inflation will move back towards the Government's 2% target by the end of the year, and down from its current level of 3%, thus bringing prices into line with wages.
Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said: "After the tightest squeeze on consumer incomes in a generation, the worst is now behind us and most people should start to feel a bit better off by the end of the year."
Spending growth is forecast to be 0.8% this year and 1.1% in 2013.
The ITEM Club warned that high streets will still see a slow recovery as consumers pay down debt.
Mr Goodwin added: "It's an improving outlook for the UK high street but it's going to be a slow and steady recovery.
"Rather than splashing their cash, we're expecting to see conscientious consumers keeping a relatively firm grip on their purse strings."
The economists also predicted that audio visual goods, such as TVs, mobile phones and broadband, will continue to perform strongly as "rapid" advancements in technology and falling prices underpin strong demand.
But the group warned that major risks remained.
Mr Goodwin said: "We still need to keep our fingers tightly crossed.
"The eurozone crisis continues to cast a long shadow and consumer confidence could easily take another hit if the situation worsens, particularly if unemployment nudges up.
"We are optimistic, but conditions on the high street will remain fairly fragile until a more sustainable recovery takes hold."