Poor income growth and inequality mean UK families face ‘terminal decline’ in living standards
Champagne for some: rising income inequality and stagnant growth for poor families mean most of the UK is teetering on the brink of financial disaster – and our politicians have been to blame since 1992.
Income growth for poor households has suffered “complete collapse” over the past 20 years.
Income inequality has run rampant under successive governments since 1992, with five of the most unequal years taking place since 2013-14.
Add these together and our failed politicians have left the UK’s families “brutally exposed” to the cost of living crisis.
That is the finding of a new report by the Resolution Foundation:
Real typical household disposable income growth for working age families fell to 0.7% a year in the 15 years leading up to the Covid-19 pandemic.
Non-pensioner family earnings rose 2.3% per year, or 25% per decade, between 1961 and 2004-05. Average income growth dropped to 0.7% between 2004-05 and 2019-20.
Too many families today have low discretionary incomes, little or no private savings (one-quarter have less than a month’s buffer), and an inadequate social security safety net (basic unemployment support is now down to just 13 per cent of average pay, its lowest level on record).
The lowest fifth of the population had no greater earnings on the eve of the pandemic than in 2004-05, despite GDP per person expanding by 12% during this period.
On the eve of the pandemic, social and private leased households’ incomes were 37% and 24% below average. Single parents had 35% lower salaries, while children under 5 had 20% lower incomes.
Couples without children (33% higher), mortgagors (27% higher), those 55-60 (19% higher), and those in the South East of England had salaries well above the general median (12 per cent higher).
The research says salary is driving Britain’s falling living standards. Typical salaries remain the same as they were before the financial crisis, reflecting a salary loss of £9,200 per year.
Adam Corlett, Principal Economist at the Resolution Foundation, said a solution needed to be found quickly: “To do that, we must address our failure to raise pay and productivity levels, strengthen our social safety net, reduce housing costs and build on what we’ve done well – such as boosting employment for lower-income households.”
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