Bold plans wanted to finish years of lagging behind G7 as rents outstrip wages

Labour’s plans to build 1.5million homes and plough much-needed cash into infrastructure could see it overtake better-performing countries, economists say.

The UK has fallen behind other G7 nations, and needs to be bold to turn the tide, think-tank the Resolution Foundation found. A new report today says focusing on growing cities could give the economy a bigger boost than building homes in rural areas.

Emily Fry, senior economist at the Resolution Foundation, said: “The new Government’s focus on boosting growth is badly needed as the UK’s long-term economic malaise has left us falling behind our peers, and caused living standards to stagnate.

“Early commitments on infrastructure spending, planning reform and housebuilding each have the potential to boost growth – if they get the detail and delivery right. But the Government will need to be even more ambitious in other areas – from resetting relations with the EU to getting its labour market reforms right, and stepping up investment – if it wants Britain to enjoy the strongest growth in the G7.”

It comes as new figures revealed private rents continued to outstrip wages. UK rents rose by 8.4% in the year to August 2024, a faster rate than the headline wage growth of 5.1%.

Ben Twomey, Chief Executive of Generation Rent, said: “Prices in the shops may have stopped rising so quickly, but renters are still seeing our single biggest cost go up faster than our incomes. This isn’t news to renters, who have been feeling this squeeze for a very long time as our landlords snatch away more and more of our wages.

“The government’s Renters’ Rights Bill, published last week, offers many positives for tenants, but the cost of renting crisis will rage on unless Westminster slams the brakes on these runaway rents. This Bill must contain protection from these unaffordable rent rises, which should mean preventing rent rises going above wage growth or inflation – whichever is lower. “