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UK facing decade of economic stagnation, warns TUC

Wages and household incomes must start rising soon or the economy risks creating a personal debt bubble similar to the one that helped cause the recession, the TUC has said.

According to TUC analysis, Britain faces a "lost decade" of economic stagnation because of the current growth rates.

The study showed rising population has been the driving force behind recent economic growth. But GDP income per head is lower than when the Government took office in 2010 and will not return to pre-recession level until 2018.

The analysis showed GDP per head is now £23,728 - just 0.7% higher than the lowest point of the recession in 2009 and 0.7% lower than in 2010.

The TUC predicts the pre-recession level peak of £25,652 GDP per head will not be reached until early 2018 if the economy continues to grow at the current pace.

No green shoots

The TUC said it wants to see ministers do more to promote high quality job creation and fair wages as a way to raise living standards and boost productivity.

Frances O'Grady (pictured), TUC general secretary, said: "After years of recession and stagnation, prolonged by painful austerity, the Government has been quick to claim we are back in recovery.

"The basis for recent economic green shoots is not encouraging either. Too many people are having to run down their savings or turn to credit cards to spend in the shops, rather than see their incomes grow."

The Treasury insisted the economy was "on the mend", citing recent GDP figures, which showed 0.7% growth in the second quarter, but admitted there was still a long way to go.

"The Government has taken continued action to help people who work hard and want to get on," a spokesman said.