With salaries stagnating and inflation hitting record highs, UK households are feeling the squeeze, according to the Resolution Foundation. In particular, it is renters and those with young children who are most severely impacted.
According to the Resolution Foundation, household disposable income growth for working families dropped to just 0.7% a year in the 15 years leading up to the outbreak of the Covid-19 pandemic.
The data also shows a drop in living standards across the UK. Between 1961 and 2004-5, typical working household incomes increased by 2.3% per year, on average, or 25% per decade. However, between 2004-05 and 2019-20, typical income growth slowed to just 0.7% per year.
Adam Corlett, Principal Economist at the Resolution Foundation, commented: “Households across Britain – and across many other countries – are currently grappling with high levels of inflation that we haven’t seen for generations.”
“But while many of the causes of the current crisis are global in nature, it is Britain’s recent history of low income growth and high inequality that has left so many households really struggling to cope.”
“Britain’s poor recent record on living standards – notably the complete collapse of income growth for poor households over the past 20 years – must be turned around in the decade ahead.”